Fashion retailers have struggled so far this year, with poor weather patterns and consumer apathy giving new spring/summer lines a lukewarm welcome. Furthermore, a surplus of stock left over from the previous season has caused many to put together sales and promotions in a bid to clear warehouse space which has had a devastating effect upon overhead profits.
However, popular high street chain New Look has certainly got plenty to celebrate after turning around a string of recent poor performances. The retailer has managed to post a return to profit after announcing substantial losses this time last year.
New Look, which is co-owned by private equity groups Apax and Permira, saw sales increase by 2.5 per cent in the 2012-2013 financial year – equating to a total pre-tax annual profit of £3.1 million. This is largely due to increased consumer interest on the company website, with significant upgrading leading to a 50.1 per cent boost in online sales.
In total, online sales in the 12 months to March 31st amounted to just under £95 million.
According to the brand’s board of directors, the retailer will now continue with the implementation of the turnaround plan which they believe is entirely responsible for the success of the past year.
Chairman Alistair McGeorge voiced his hopes that shopping with New Look is now a much more pleasurable experience for customers.
He says; “Our three-point turnaround plan of cost savings, margin improvement and revenue growth enabled us to deliver strong results and continue to re-invest in our business.
“We’ve worked hard to give customers an engaging experience, whether shopping with us online or in any of our physical stores.”
Unfortunately, the strength of the internet marketplace was not echoed in the chain’s stores– indicating that initiatives to encourage consumers back onto the high street have so far failed to dramatically improve the situation.
The group currently operates 589 stores in the UK after closing 42 underperforming properties as part of the turnaround plan. Around 25 per cent of the remaining stores have undergone, or will undergo, refurbishments in order to appeal to a broader consumer base.
Yet while UK stores may be underperforming in general, elsewhere it is a very different story. Despite the struggles still facing countries affected by the Eurozone crisis, sales on the continent remain strong and have even allowed New Look to expand its international store portfolio from 499 to 549 outlets.
Furthermore, the first Chinese store will open during March 2014 so the retailer can take advantage of this emerging market.
The high street may still be struggling, but New Look’s latest results will give hope to other fashion chains. By utilising the internet to back up physical sales, and by improving the format of existing stores, this retailer has turned around a poor run of sales reports to firmly establish itself as a survivor of the recession.
Do you think the troubles New Look faced are now over, or will the retailer have to further invest in store improvements and its digital presence in order to ensure complete security?
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