Skimpy tops cut into margins at New Look

The fashion trend for skimpy tops and mini skirts has caused a trading problem at New Look, the high street retailer.

Shares in the company fell 10 per cent to 221.5p yesterday after the group unveiled a sharp fall in underlying sales in current trading as well as a slight dip in margins.

The company blamed the current trend for skimpy outfits which cost far less than last year's hot sellers such as gypsy-look tops and jeans. So while the volume of sales has held up, New Look has made less money from these transactions.

Stephen Sunnucks, chief executive, said trading had been strong in April but that May had proved tough. The result was that in the eight weeks to 24 May, like-for-like sales were down by 6.6 per cent on the same period last year, although the company said comparisons with the previous year were particularly onerous.

"We are a fashion business and this season fashion ranges in vests, mini skirts and three-quarter-length trousers were at lower price points," he said. "Garment sales were up 9 per cent on last year but average selling prices were down 10 per cent."

Mr Sunnucks said the stores would be bringing in "transitional" autumn ranges from the end of July. These include 1960s and 1980s looks in casual jackets and knitwear which are tipped to be popular. Prices of these items are more in line with last year, the company said.

The comments came as New Look reported record full-year profits and the buy-out of its French retail operation. It is paying £29.7m for the remaining 49 per cent stake in the Mim chain of discount fashion stores in France. New Look bought its original stake in December 2000 but felt it could make more progress if it took full control. There are currently 171 Mim stores but New Look believes there is scope for 350-400.

Mr Sunnucks said he was pleased with the full-year figures, which showed profits had tripled in the last three years. Profits rose by 36 per cent to £85.2m and like-for-like sales were up by 7.7 per cent.

He said New Look was "a transformed business" and now had 4.1 per cent of the UK women's clothing market, behind only Marks & Spencer and Next.

Separately yesterday Moss Bros, the recovering menswear retailer, reported a continued improvement in trading. Like-for-like sales in the 17 weeks since the start of the company's financial year are six per cent higher than last year. Margins are up by 2.5 percentage points.