The fashion chain New Look yesterday became the third major company in as many days to scrap a planned stock market flotation, blaming the lack of appetite of potential investors.
The high street stalwart, which has 1,010 branches, blamed the current "volatility" of the market and noted that the shares of listed retailers had fallen 11.3 per cent since the start of the year. The postponement came 10 days after New Look, which is backed by private equity, formally announced its £1.7bn initial public offering (IPO).
Up to 10 companies are understood to have dropped pulled plans for flotations in the past two weeks. On Thursday, the private equity giant Blackstone withdrew its second IPO in 24 hours when it halted plans to float Merlin Entertainments, which runs the theme park at Alton Towers. A day earlier, it pulled a deal for the airline-ticketing business Travelport.
The withdrawal of New Look's IPO also raises questions about the flotation this year of Ocado, the loss-making online grocer, and SuperGroup, the owner of the Superdry fashion brand. A spokesman for SuperGroup insisted yesterday that it was "on track" for its IPO at the end of March. Ocado, which plans to float for up to £1.2bn in May, declined to comment.
New Look decided to postpone the IPO, scheduled for next month, at a board meeting yesterday morning. The chief executive, Carl McPhail, subsequently said the decision was taken in light of "the considerable volatility in the equity markets".
On 2 February, New Look had said it hoped to raise £650m from next month's flotation and use the funds to cut its net debt to £450m, giving it headroom to continue growing in the UK and overseas.
But sources in the City highlighted the reservations potential investors had about New Look's proposed IPO. These included its mature UK business, an unproven international strategy and a lack of desire amongst institutions to line the pockets of private-equity firms with another float. There was also the so-called "Debenhams effect", referring to the department store whose private-equity owners floated the company when it was saddled with a mountain of debt in 2006, then presided over a fall in its share price before it recently recovered.
New Look's French chain, Mim, suffered a 14.1 per cent fall in underlying sales in the year to March 2009.
Luca Solca, an analyst at Bernstein, pointed out that the "market is jittery" about general retailers because of the further squeeze on discretionary spending coming down the line from increases in tax and interest rates, and rising inflation.
He said of New Look: "It is very much middle of the road in terms of appeal. You don't find the most compelling look and fashion, so it's difficult to get excited."
Nevertheless, New Look has grown rapidly to become one of Britain's best-performing chains since it was taken private in 2004 in a £699m deal backed by Apax and Permira. Its UK like-for-like sales rose 5.9 per cent in the 14 weeks to 2 January. It has 601 UK stores and others in Russia, Poland, Egypt and the Middle East.
Sweet music: Retailers, pubs and hotels win music licence fees battle
Retailers, pubs operators and hoteliers will save millions of pounds a year after winning a legal battle yesterday over the charges they pay for playing recorded music. The High Court upheld a ruling by a Copyright Tribunal against Phonographic Performance Ltd (PPL), the company that licences music played in public and collects copyright fees on behalf of record companies.
In 2005, PPL significantly increased its licence charges, which saw some outlets' fees more than double overnight. One leading clothing chain claimed its bill rose from £176,000 to £408,000 a year.
The British Retail Consortium said the ruling by the Judge, Mr Justice Arnold, would save retailers £5 a year and secure them a £20m refund for the "excessive charges" they had paid over the past five years. The BRC's director general, Stephen Robertson, said: "We have finally won a victory for fairness."
A spokesman for the British Beer and Pub Association said the decision would mean savings of about £3m a year for pubs and open the door for refunds going back to 2005 of up to £10m.