New Look says current trading "more challenging"

Tue Nov 12, 2013 3:06am EST

* H1 pretax profit 13.8 mln stg vs loss of 13.6 mln stg

* Revenue 753.2 mln stg, up 6 pct

* Group like-for-like sales up 1.9 pct, UK up 2.6 pct

* Gross margin up 40 basis points

* CFO Alastair Miller to step down

LONDON, Nov 12 (Reuters) - British fashion retailer New Look swung to a first half profit driven by revenue growth, particularly online, as well as reduced discounting and cost savings, though it cautioned that recent trading has been tough.

"In line with the rest of the sector, current trading is more challenging and as yet we are not seeing any benefits of economic recovery feed through to our customers' pockets," the firm, owned by private equity groups Apax and Permira and founder Tom Singh, said on Tuesday.

It added that it was "well placed" for the key Christmas trading period.

Britain's retailers have enjoyed a better few months recently as the economy has moved back into growth, though a warm autumn has hampered some clothing chains' ability to shift winter ranges and executives see continued pressure on consumers with wage rises lagging inflation.

New Look, which trades from over 1,100 stores across 32 countries, made a pretax profit of 13.8 million pounds ($22.0 million) in the 26 weeks to Sept. 28, reversing a loss of 13.6 million pounds in the same period last year, on group revenue up 6 percent to 753.2 million pounds.

Group sales at stores open over a year rose 1.9 percent, with UK like-for-like sales up 2.6 percent.

The firm's online sales jumped 78.8 percent, reflecting improved functionality on its website and better delivery options.

Gross margin at group level rose 40 basis points due to tighter control of stock and fewer markdowns.

New Look slumped to a loss in 2011-12 but made a small profit in the 2012-13 year.

After a refinancing in May 2013 it ended the 2012-13 year with net debt of 1.1 billion pounds.

The firm said it sees a "huge" international opportunity and plans to open its first store in China by spring 2014.

New Look also said Alastair Miller, its long term chief financial officer, will leave the firm when a successor is appointed.