Brait's New Look proposes CVA with closure of 60 stores

Kenny Wastell
08 March 2018

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Brait Private Equity-backed high street clothing and accessories retailer New Look has proposed a company voluntary arrangement (CVA) that would include the renegotiation of its debt and the closure of 60 of its stores.

The proposal also includes the renegotiation of rental agreements related to 393 of its 593 stores, with the intention of reducing costs and disposing of a further six sites that are sub-let to third parties. It would also see up to 980 from a total of 15,300 jobs cut at the retailer.

The development is the latest sign of trouble in the consumer sector, with a number of PE-backed casual dining chains struggling, in addition to Rutland Partners-backed consumer electronics retailer Maplin Electronics entering into administration in February.

In a statement, New Look attributed its underperformance to a "difficult retail environment", in particular weaker consumer confidence owing to Brexit, competition from online channels and high rental costs.

In the year ending in March 2017, New Look saw a drop of 6.6% in like-for-like sales globally. This reached 6.8% in the UK, which accounts for 81.6% of its revenues, according to publicly available documents. It generated a loss before taxation of £16.6m in the same period. However, according to Sky News, the business has incurred a pre-tax loss of £123.5m over the past nine months, with like-for-like sales down almost 11% in the UK.

New Look has a history of private equity ownership, having been a portfolio company of Apax Partners and Permira for 11 years, prior to Brait's acquisition. Brait bought a 90% stake in the company from Apax and Permira in May 2015 for £780m, in a deal valuing the group at £1.9bn.

Deloitte is overseeing the New Look restructuring plan and creditors are scheduled to vote on the CVA on 21 March.