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New Look CVA secures 98% creditor approval

New Look’s company voluntary arrangement (CVA) has been given the green light by 98% of its creditors and landlords, resulting in 60 store closes and nearly 1,000 job cuts.

New Look proposed a CVA earlier this month in a rescue plan to reduce its UK store estate and rent costs, with 980 potential job losses.

It sought to close 60 out of its 593 stores in the UK, alongside a further six sites sub-let to third parties.

Under the terms, the stores identified for potential closure are “most likely” to close within six to 12 months’ time subject to decisions by individual landlords, but no stores will close on the first day.

The proposal also includes revised lease terms and rent reductions ranging between 15% to 55% across 393 stores. The CVA process is expected to take three years.

Alistair McGeorge, executive chairman at New Look, said: “In order to help restore long-term profitability, it is clear we need to reduce our fixed cost base.

“We are therefore pleased to have gained the support of our creditors to address our over-rented store estate. Launching a CVA has been a tough decision and our priority remains keeping all potentially affected colleagues informed during this difficult time.”

He added that the CVA is “one of a number of necessary actions we are taking to get the company back on track”: “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 ecommerce and stores.”

Daniel Butters and Neville Kahn of business advisory firm Deloitte LLP were appointed as nominees to the CVA earlier this month.

Industry experts previously told Drapers that while a potential CVA at New Look was “long awaited”, it would not go far enough to cut costs at the struggling retailer.

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Readers' comments (8)

  • Creditors giving New Look more rope to hang themselves, as well as taking a big hit themselves, A very depressing - if unsurprising - outcome.

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  • Was there any choice, receivership! Part of the bigger picture here is for landlords, a 55% reduction!!!! This surely sets a standard for all other High Street retailers, they will push to follow, it's a given that if the High Street is to remain competitive then rents and rates obviously have to fall. Which begs a question? How many pensions are linked to Commercial Property Values, which will clearly continue to drop and how likely (for Landlords that are highly geared) are we to see loan defaults by Landlords, any chance of a mini Commercial Property Sub Prime?

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  • What choice did creditors have? #none

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  • You get no choice as a creditor. Either agree or lose everything.
    As usual they will just dispose of some stores (renege on rental agreements) and carry on the same way as they have in the past.
    Hope everything works out for them, last thing we need is another retail collapse. However with same management, i have my doubts.

    Landlords, need to look at rental rates, Local councils the rates and retailers need to stop this madness of constant promotions and sale events to make retail work. Everyone needs to be involved.

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  • Landlords always get a bad rap, but it is not their fault that a business renting their space is run badly.

    If a business is finding the rent and rates too high - then don't sign up and go elsewhere. If you can't stand the heat and all that.

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  • Issue is that business's are going elsewhere, online, you only have to look at Towns up and down the UK to see the impact of a perfect storm re rents, rates and online is having. Now doubt likes of Bluewater et al give a reasonable return they are in the minority and it doesn't matter if your selling Gold if footfall is poor then the math's doesn't stack up. Unless rents and rates are realistic in today's challenging market then we will see the High Streets of the UK turn into Ghost Towns. Many landlords would have rather see an empty shop than reduce there rent and start a precedent. Looks like that might be starting to happen, it needs to if we are breath live into the Towns the length and breadth of the UK , current rents and rates total fools gold regardless of how good your offer.

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  • darren hoggett

    The middle to longer term viability for Indies in expensive City Centre locations is bleak, as many would be much better off moving to secondary and tertiary locations in the longer run as the figures just won't stack up.

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  • Retail businesses just need to be run better, all these firms struggling and dying are masters of their own fate. They see change but do not adapt to it, just keep on plugging away doing the same as they've always done.

    High street retailers will survive if they become more agile and embrace the demands of the modern customer.

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