New Look, new stores – but no new flotation

BUDGET fashion chain New Look is hoping to open around a dozen new stores in the UK this year as part of a drive to create 1,500 jobs.

It is not yet clear how many the group hopes to open in Yorkshire, where it is under-represented compared to the rest of the country. The group has more than 30 stores in the region, but this is out of 602 in the UK in total.

The group, which is bucking the downturn on the high street, reported an 18 per cent rise in operating profits to 163m in the year to March 27.

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It saw 1.2 per cent growth in like-for-like sales, but warned it expects a year of tough trading ahead.

But it is confident of gaining market share as cash-strapped shoppers snap up its fast-changing, cut-priced fashions, from wedge wellies to Grecian tops.

New Look said it has taken customers from more expensive rivals such as Marks & Spencer and Next to become Britain's second-biggest womenswear chain.

Its UK performance has outperformed its stores abroad with a five per cent increase in like-for-like sales in the UK.

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New Look reported strong UK demand for maxi dresses, wedge heels and leggings, mirroring good growth at budget rivals like Primark and Matalan.

The group said it has no plans to relaunch its stock market flotation in the near future amid an uncertain economic environment for consumers.

It postponed a planned stock market return in February owing to volatile financial markets.

Chief executive Carl McPhail said: "We appointed banks in the run up to the postponement and those banks still sit there. But there's nobody doing any specific work for us on an IPO because we clearly don't think at this stage that the market is right."

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Asked whether that might change later this year, McPhail said: "If there is an opportunity, then we don't rule anything in or anything out."

New Look, taken private in 2004 by private equity firms Apax and Permira, said in February it hoped to raise around 650m in a flotation to reduce its more than 1bn of borrowings.

But investors were wary of the plan, particularly after department store chain Debenhams returned to the stock market in 2007 laden with debt and saw its shares plunge.

Analyst Matthew McEachran at brokerage Singer said New Look's results compared favourably to listed rivals, with the 18 per cent rise in underlying profits outstripping increases of 1.5 per cent at Marks & Spencer, four per cent at Debenhams and 9.4 per cent at Next.

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New Look, which runs over 1,000 stores in 13 countries, booked an exceptional cost of 10m, including fees related to the aborted flotation.

Mr McPhail said he was resigned to an increase in VAT sales tax to 20 per cent from 17.5 per cent in the June 22 emergency budget, but urged the Government not to implement it until next year, saying an earlier move would be an operational nightmare.

"I wish I had a crystal ball, but we don't know what will happen with the Budget later this month. We'd like to be away from this uncertainty, and we will just have to wait to evaluate our position," said Mr McPhail.

The group plans to add around 200,000 square feet of selling space in Britain in the coming year and up to 150,000 abroad, including franchised stores.

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Finance director Alastair Miller said capital spending would be around 90m in the 2010-11 financial year.

New Look has increased its UK market share from 4.7 per cent to 5.2 per cent.

It opened 61 new stores across the group, including 16 in the UK, in the year to March 27.

The company also created 1,900 new jobs, taking the number of people employed by the group to more than 22,000.

Up-to-date looks at low prices

New Look opened its first store in 1969.

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It now has more than 1,000 stores worldwide, in the UK and Republic of Ireland, Europe, the Middle East, Singapore, Russia and Poland.

Last year, 355m customers visited New Look either online or in one of its stores.

The retailer seeks to copy the latest trends from the catwalk, celebrities and street fashion as fast as it can, providing customers with very up-to-date fashion at low prices.

The brand has expanded beyond clothes for girls and women and now sells menswear.

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Its online business is also growing and it has one of the most visited fashion websites in the UK.

The group says that it is committed to ethical trading and animal welfare and is limiting its impact on the planet by reducing the waste it sends to landfill and using less energy.