June 25, 2019 / 8:56 AM / 4 months ago

New Look losses mount as Brexit, rains keep shoppers away

(Reuters) - British fashion chain New Look reported a bigger annual pretax loss, hurt by a large charge, while Brexit woes and rainy weather kept many shoppers out of its stores.

New Look, whose largest shareholder is South African investment firm Brait, reported statutory loss before tax of 522.2 million pounds for the year ended March, compared with a loss of 190.2 million pounds a year earlier.

The loss was mainly driven by a 423.3 million pound non-cash goodwill and brand impairment charge after a restructuring, New Look said.

In January New Look proposed a debt-for-equity swap to reduce its debt by 1 billion pounds, in its latest turnaround attempt. That transaction was completed in May.

New Look implemented its restructuring in May, reducing its long-term debt to 350 million pounds.

The company also said it said it cut costs worth more than 80 million pounds, helped by an international strategic review that included a closure in China and appointment of administrators in Belgium, France and Poland.

New Look staved off a potential collapse into administration last year when creditors and landlords backed a plan enabling it to close 60 UK stores.

The company reported core underlying operating profit of 33.2 million pounds, compared with a loss of 35.7 million pounds a year earlier, while core like-for-like sales fell 1.6% in the year.

“We expect the retail environment to remain as challenging as ever in the year ahead, with continued Brexit uncertainty and unseasonable weather impacting current trading,” Executive Chairman Alistair McGeorge said in a statement.

British retailers are battling a perfect storm of rising costs, uncertainty in the economy around Brexit and the structural shift online.

Ted Baker warned that underlying profit for the year would fall short of analysts’ estimates after an “extremely difficult” start to 2019, while Superdry has issued a string of profit warnings.

Earlier this month, an industry survey said British shoppers cut back on their spending in May by the most in more than 20 years, raising questions about how long consumers can keep on cushioning the economy from the impact of Brexit.

Debenhams and Marks & Spencer have announced store closures, while Philip Green’s Topshop-to-Dorothy Perkins fashion empire narrowly avoided falling into administration, as retailers struggle with rising labour costs, business property taxes and growing online competition.

(This story corrects to say Brait is New Look’s largest shareholder, not owner, in second paragraph. Corrects to say the debt-for-equity swap was completed in May, not expected to be completed in June, in fourth paragraph).

Reporting by Tanishaa Nadkar and Noor Zainab Hussain in Bengaluru; editing by Gopakumar Warrier

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