UK-based fashion retailer New Look has proposed to reduce its store count and rental costs due to a difficult retail environment and challenging trading performance.
Under the proposal, New Look intends to close 60 stores across the country and sublet six sites to third-parties.
The closures are expected to affect 980 employees, and the company said it is making efforts to redeploy them within the business where possible.
New Look executive chairman Alistair McGeorge said: “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.
“We have held constructive discussions with our key landlords and strategic partners and will now seek creditor approval on our CVA proposal. A priority for us is to keep all potentially affected colleagues informed during this difficult time.”
The retailer has also proposed a reduction in rental costs and revised lease terms across 393 stores.
New Look is said to have initiated a company voluntary arrangement (CVA) and is seeking an approval on a plan from its creditors in order to improve company’s operational performance.
The company is seeking creditor approval on the proposal, which is due on 21st March. Until then, all its stores in the UK will function normally, while its e-commerce segment will be completely unaffected by the proposed changes.
Deloitte’s Daniel Butters and Neville Kahn have been appointed as nominees to the CVA.
Deloitte partner Daniel Butters said: “The retail trading environment in the UK remains extremely challenging, driven by weaker consumer confidence, the implications of Brexit and competition from online channels.
“New Look is an iconic brand on the high street and the CVA will provide a stable platform upon which management’s turnaround plan can be delivered.
“We have fully engaged with the British Property Federation and its members and their views are reflected in what we believe is a fair proposal to restructure the property obligations of the company.
“It is important to stress that no stores will close on day one, and employees, suppliers and business rates will continue to be paid on time and in full.”