Yahoo Finance New Look to pull out of China with closure of 120 stores
New Look is to close all its 120 shops in China by the end of the year after disappointing sales, as it continues to battle tough conditions on the UK high street.
The fashion chain, which persuaded landlords to back the closure of up to 60 of its 593 UK stores and rent reductions on dozens more via an insolvency process in March, said it was reviewing all its international markets.
The retailer said it had decided to exit China, where it employs more than 700 people, just over four years after entering the country because it had “not achieved the necessary sales and profitability to support the significant future investment required to continue operations”.
The closure of its Shanghai head office, expected in January, marks the end of an overseas expansion that was seen as a key part of the chain’s future under former boss Anders Kristiansen, who was partly hired for his expertise in China.
New Look has stores as far afield as Azerbaijan, Kazakhstan, Qatar and Poland, some of which are run directly and some via franchise partners.
Alistair McGeorge, its executive chairman, said: “Having reviewed the trading performance of our business in China and the substantial investment required to continue operations in the market, we have made the difficult decision to exit our stores in China. Our priority will be to support all affected staff during this time. As our turnaround plans continue, we remain focused on ensuring that New Look is well positioned to drive strong business performance and profitable growth.”
McGeorge returned to lead the retailer late last year after sales and profits collapsed. He has said the previous management team led by Kristiansen pushed up prices and started selling clothes that were “too young and edgy”.
The chain is among a string of retailers to use a company voluntary arrangement (CVA) to close stores or cut rents, including Mothercare and Carpetright, as high street retailers face rising costs and a shift towards online sales. Consumers are also choosing to divert spending on items such as homewares and clothing to experiences such as eating out or holidays, and on services such as telecommunications.
