The fashion retailer New Look yesterday laid bare the depth of its annus horribilis in 2010 that saw its pre-tax profits evaporate after a series of self-inflicted wounds on pricing, fashion ranges and cost controls.
Alistair McGeorge, the executive chairman of New Look, has kicked off a strategic review of the private equity-backed chain, which pulled a £1.8bn flotation in February 2010.
He said the company had "suffered significant internal disruption" last year, notably from moving its buying-and-merchandising team from Weymouth to central London last spring, which resulted in about half of them departing.
However, Mr McGeorge – the former chief executive of rival Matalan who was parachuted in to New Look in April – pulled no punches in describing a catalogue of errors and lamented the company had not been "very cost-conscious" in terms of how it conducts business.
He said there had "not been enough value" in New Look's fashion ranges and that it had allowed too many products to drift towards the upper end of its pricing structure, which "undermined our competitiveness".
Mr McGeorge said: "We should be fantastic for going-out wear but for some reason we lost our way a bit." He added its supply chain was "too slow" and hinted it would look to rejig its supplier base to international territories closer to the UK.
New Look's UK like-for-like sales tumbled by 7.1 per cent over the year to 26 March, which would have been worse without booming online revenues. Its plummeting sales forced New Look to engage in fierce discounting that dragged its gross margins down by 280 basis points.
The overall impact was that New Look's pre-tax profits were wiped out, following a £36m profit the year before. Total sales at the chain, which has 650 stores in the UK, fell by 0.2 per cent to £1.46bn. It was helped by a more robust performance overseas, including at its Mim chain in France and Belgium.
Net debt at New Look – whose private equity owners, Apax and Permira, hold 27 per cent each of the chain – fell only marginally to £1.035bn. The company said it could meet its next repayment of £110m in its 2013 financial year from its cash flow. Following the ousting of its chief executive Carl McPhail and chairman John Gildersleeve in March, Tom Singh, who founded New Look in 1969 and still holds a 22.4 per cent stake, returned as commercial director.