LONDON (Reuters) - British fashion retail chain New Look [NEWOON.UL] on Wednesday sought approval from its creditors to cut 980 staff and close more than 60 stores after performing poorly as it seeks to amend the terms of its debt.
In a statement the company, which opened its first store in 1969 and is owned by South African investment heavyweight Brait , said it had identified 60 out of its total 593 stores in Britain for potential closure, as well as a further 6 sites which are sub-let to third parties.
“Given our challenged trading performance and over-rented UK store estate, we are having to take tough but necessary actions to reduce our fixed cost base and restore long-term profitability,” Executive Chairman Alistair McGeorge said.
New Look’s woes are another headache for South African businessman Christo Wiese, the biggest shareholder in Brait, after a share price crash in Steinhoff International stripped him off his billionaire status.
Wiese backed Brait’s bet on the British consumer in 2015 in a 1.9 billion pound ($2.64 billion) deal that put the South African investment heavyweight in the middle of a crowded high street competing with fast growing online rivals such as ASOS and Boohoo.
Brait wrote down the value of the business to zero in November until its “turnaround strategy has taken shape”, adding that it remained a committed long term shareholder.
Tough trading conditions in Britain last week pushed high-profile retailers Toys R Us UK and electronics chain Maplin into administration, a form of creditor protection, putting over 5,000 jobs at risk.
New Look’s company voluntary arrangement proposal also includes a reduction in rental costs and revised lease terms across 393 stores.
As a result of the shop closures, a maximum of 980 people out of a staff base of 15,300 in Britain will be made redundant, the company said, adding that all efforts will be made to redeploy staff within the business.
All British stores will remain open as normal during the period of the proposal, until March 21, and New Look’s online sales channel will be unaffected.
Earlier in March, IFR reported that the British retailer was seeking to amend the terms on 1.2 billion pounds ($1.66 billion)of debt.
In February New Look said its earnings and revenue fell in the three quarters to December as it implemented a turnaround strategy after struggling to compete in the British market.
Prior to Brait, Permira and Apax held the asset for over a decade, an unusually long period for buyout funds.
Reporting by Dasha Afanasieva, additional reporting by Tiisetso Motsoeneng in Johannesburg, editing by Louise Heavens and Ken Ferris