Fashion retailer New Look is all set to shut down 60 stores and cut 980 jobs across the UK, after 98% of its creditors approved a restructuring plan.

In a bid to turnaround the business by reducing its store count and rental cost base, New Look launched a company voluntary arrangement (CVA) proposal during the first week of March, which was supported by the company’s creditors and landlords.

CVA is a form of insolvency that has been designed to help companies protect their business from going completely bankrupt.

New Look executive chairman Alistair McGeorge said: “In order to help restore long-term profitability, it is clear we need to reduce our fixed cost base. Launching a CVA has been a tough decision and our priority remains keeping all potentially affected colleagues informed during this difficult time.

“In addition to implementing other cost-saving initiatives, we are already focusing on driving future full price sales by realigning our pricing to offer significantly better value, adding flexibility to our buying model, and improving our speed to market. Additionally, we have further strengthened our alignment between e-commerce and stores.”

“Launching a CVA has been a tough decision and our priority remains keeping all potentially affected colleagues informed during this difficult time.”

In addition to closing 60 out of its total 593 stores in the UK, the company has identified a further six stores that are sublet to third-parties.

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The identified stores for closure will be shut down within six to 12 months, subject to decisions by individual landlords.

As a result of these closures, nearly 980 employees from the company’s current workforce of 15,300 will lose their jobs. The retailer, however, stated that it will make all efforts to redeploy the affected employees.

Under the CVA, which will be valid for a period of three years, the company will also modify lease terms and rent reductions ranging between 15% and 55% across 393 stores to rein in the operational cost.

According to Globaldata analyst Charlotte Pearce, a deal to renegotiate rents with landlords is a beginning.

She said: “It’s a step in the right direction. It just doesn’t go far enough. They need to keep rationalising and cut the store base in the long run. That’s how retail is going. It’s about getting the right stores in the right locations.”

The turnaround plan is part of McGeorge’s strategy to reduce operational expenses and refocus the brand to appeal to customers aged between 25 and 45-years old.