New Look, the high street women's fashion chain, yesterday said it had seen an end to the summer trend for cheap vest tops, and said its higher priced autumn fashions were taking off with customers.
The group is still weighing up the possibility of an offer for the company from its founder, Tom Singh. Mr Singh, a non-executive director, owns a 28 per cent stake in New Look and has indicated that he wants to buy it back for about £650m. The board said it is still considering his proposal.
New Look said that sales in the first six months of the year were down on a like-for-like basis, but this had started to improve in the past few weeks as shoppers took to its 1960s-inspired autumn ranges.
"We have been very encouraged by the reaction to our autumn range and have seen a return to positive like for likes," Stephen Sunnucks, the chief executive of New Look, said yesterday. "Our Sixties style black and white prints, funnel neck coats, tweed suits and our shoes are being received very well. The problems of the spring and summer are behind us."
In the five weeks to 27 September like-for-like sales grew 1.4 per cent, but fell 3.6 per cent over the six-month period. The company has suffered from the long hot summer when cheap cotton vests were in high demand. It sold 5 million, three times more than last year, which has hit its average selling price.
This meant that the group, which is the third largest in the womenswear market, had to cut costs and tightly control stocks. Sales were impacted, falling 7.8 per cent in the six weeks to 23 August, but the group enjoyed a 2.6 per cent margin. Margins across the six-month period were up 0.9 per cent, far better than had been expected.
Matthew McEachran, an analyst at Investec Securities, said: "The past five weeks shows a much improved trend. This statement confirms that the adverse issues affecting the company's first-half profit growth are behind them, with good acceptance of the autumn range and its average selling price now aligned." He believes any bid for the company would have to be in the region of 350p a share.
New Look, which floated in 1998, is also in the midst of expanding its stores, refurbishing smaller sites and last week branched out into menswear in 10 of its stores. Its new Oxford Street store in London is taking £300,000 a week. The company now expects to open a total of 200,000 sq ft of UK space by March 2004.
Mim, the French business it acquired this summer, is proving its worth, reporting gross margins up 1.4 per cent despite a fall in like-for-like sales of 2.5 per cent. New Look's shares yesterday closed down 2.5p at 313p.Reuse content