New Look is considering closing as many as 60 stores, putting up to 980 jobs at risk.
The struggling fashion chain has confirmed plans for a restructuring process called a company voluntary arrangement (CVA), which could involve the closure of more than a tenth of its 593 stores, while a further six sites have been sublet to third parties.
The process, which is designed to help struggling companies stave off insolvency, must be approved by creditors including landlords at a meeting on 21 March, will also involve rent reductions at 393 stores.
Alistair McGeorge, executive chairman of New Look, 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 company said it expected a maximum of 980 redundancies out of a workforce of 15,300 as a result of the store closures which would take place over the next six to nine months. It said efforts would be made to redeploy as many people as possible.
McGeorge was parachuted in to lead the retailer late last year after sales and profits collapsed. He has said the previous management team led by Anders Kristiansen pushed up prices and started selling clothes that were “too young and edgy”.
The likely New Look closures come amid a tough time on the high street which has seen a string of well known brands collapse or close stores.
Toys R Us and electronics specialist Maplin both fell into administration last week while Mothercare has admitted it is in talks with its banks in an attempt to fund a turnaround plan that involves the closure of almost half of its 152 UK stores.
Other chains including Marks & Spencer, Debenhams and House of Fraser are also closing store space.
Retailers are facing a pinch because shoppers are switching to buying online and tightening their belts as inflation outstrips wage increases. Other pressures include a rise in the legal minimum wage and business rates as well as the increase in the cost of buying in goods from overseas as a result of the Brexit-fuelled drop in the value of the pound.
Daniel Butters, partner at Deloitte, which will be handling New Look’s CVA process, 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.”
New Look stores identified for potential closure under the CVA proposal:
Aberdeen – Bon Accord; Beckton; Bolton Mens; Borehamwood; Brynmawr; Burton Mens; Cameron Toll; Cardiff – Queen Arcade; Cheshunt; Clevedon; Craigleith; Doncaster Mens; Dundee – Wellgate; Exeter Mens; Fleet; Gateshead – Team Valley; Glasgow – Buchanan Street Mens; Gorleston; Hanley Mens – Intu Potteries; Hounslow Mens; Hull – Whitefriargate; Keynsham; Kingswood; Leeds – The Core Shopping Centre; Leicester – Haymarket; London – Marble Arch; London – Moorgate/ London Wall; London – Oxford Circus; Maidenhead; Maidstone Mens; Merry Hill Mens; Metro Centre – Mens; Monmouth; Newport Mens; Newton Mearns; North Shields; Nottingham Mens; Ocean Terminal; Peterbrough Bridge Street; Pontypool; Portswood; Ramsgate; Reading - Broad Street; Reading Oracle Mens; Rhyl; Romford Mens; Rugby; Shrewsbury Mens; Sidmouth; Stockport – Merseyway; Stockton-on-Tees; Stratford-on-Avon – Bridge Street; Thornaby; Tonypandy; Torquay – Union Street; Tredegar; Troon; Wallsend; Weston Favell; Wigan Mens.