New Look cautious about the outlook

New Look, the high street fashion chain, continued its stylish run of form yesterday with a positive update on sales helped by a shift towards larger stores and a wide-ranging refurbishment programme. However, the company warned that "current market trends may not continue".

The company, which has nearly 500 UK stores, shrugged off fears that June had been a difficult month, saying it sold 125,000 World Cup T-shirts during the tournament. Stephen Sunnucks, New Look's chief executive, said: "April was strong, May was more difficult and June was mixed. But we went on sale last week and that has started well. And the better weather has helped too."

New Look said that in the 15 weeks to 13 July its underlying sales were up by 8.1 per cent on the same period last year. This compared with growth of 10.6 per cent when the company reported doubled full-year profits of £62m in May. Gross margins were up by 2.7 percentage points.

Mr Sunnucks said strong fashion trends had helped: "Spring was all about denim and gypsy tops. Autumn is looking good for crochet knits, sportswear trends and suede. Denim isn't showing any sign of a slowdown either."

New Look is continuing the makeover of its store portfolio. It is looking to move 160 stores to larger sites and has so far completed 42. It is also upgrading 300 of its smaller stores and has done 90 so far with a view to completing the remainder by autumn 2003.

Peter Jones, a retail analyst at KBC Peel Hunt, said the company would now be trading against tougher comparisons: "The shares could drift in the summer but if that happens they would be a very strong buy."

The stock has been a very strong performer, rising from a low of 70p in September last year to 275p in April. The shares closed 2.5p higher at 240p yesterday.