New Look 'must close UK stores' to slash £1bn debt
New Look is planning to cut its debt by £1bn and raise more money to help business.
The company, which is closing its remaining 120 stores in China as well as 60 stores in the UK to return to profitability, said it had agreed with key shareholders to slash its debt from £1.35bn to £350m.
New Look aims to raise £150m to finance its business. Also, by cutting its debt, the retailer’s interest payments would be halved from £80m per year to £40m.
Executive chairman, Alistair McGeorge, said: “Today’s agreement represents a critical step in our turnaround plans…
“[It] lays the foundations to secure the future and long-term profitability of New Look by materially deleveraging our balance sheet and providing us with the financial flexibility to better attack our future.
“Over the past year, we have made significant progress with our wider turnaround plans to rebuild our position in the UK womenswear market and recover the broad appeal of our product whilst implementing significant cost savings and efficiencies.
“However, it has been clear for some time that the group’s existing level of indebtedness has been constraining our ability to accelerate our turnaround plans and would continue to limit our growth in the future.”
The South African company has stated that the climate of the British high street is still posing a challenging threat. The company’s like-for-like sales fell 2.3 per cent in Q2 in the UK.
This news comes just one day after high street retailer HMV revealed it could fall into administration, putting 2,000 jobs at risk.