New Look said that ‘a highly promotional environment on the high street’ had weighed on revenues
New Look said that ‘a highly promotional environment on the high street’ had weighed on revenues © Bloomberg

Profits fell by more than a third at New Look in the third quarter as the fashion retailer’s chief executive blamed “extremely challenging” UK market conditions for a continued slide in sales.

The retailer is majority-owned by Brait, the South African investment group, which is planning to list in London. New Look said on Tuesday that pre-tax profits had fallen 37.6 per cent to £30.1m in the 13 weeks to December 24, compared with the same period last year. Underlying operating profits were down 26.1 per cent to £52.2m while revenues inched up 0.8 per cent to £422.6m in the quarter.

Anders Kristiansen, New Look chief executive, said the UK market had “continued to be extremely challenging, with reduced footfall and a highly promotional environment on the high street” weighing on like-for-like revenues.

Group like-for-like sales fell 4.6 per cent in the quarter, while like-for-like revenues in the UK, the retailer’s home market, dropped 4.7 per cent compared with the previous year. For the year to date, like-for-like sales were down 7 per cent across the group and 7.3 per cent in the UK.

Mr Kristiansen said, however, that overall revenues were level as the retailer reported good performance in its overseas business, online and in menswear.

New Look, which has traditionally targeted younger female customers, has shifted its focus to menswear in recent years. The retailer opened four menswear-only stores in the third quarter, bringing its total of “standalone” stores for men to 19.

“It remains key to our growth to continue to diversify our offer and to invest in our priority international markets,” Mr Kristiansen said.

At the end of the quarter, New Look had 591 stores in the UK and 276 overseas, including 100 outlets in China.

Its online business ships to more than 120 countries. The retailer said on Tuesday that sales on its website were up 18.2 per cent in the third quarter, while online sales via third-party websites were 73 per cent higher in the run-up to Christmas.

Despite the relatively strong online sales, Mr Kristiansen warned that UK trading conditions would “remain challenging” in the fourth quarter and the year.

Mr Kristiansen said the retailer would “continue to focus on improving our business performance and delivering our diversification strategy”.

“While we expect 2017 to be tough and are setting our plans accordingly, we strongly believe in our ability to continue to execute our strategy,” he said.

Brait, the South African investment group that also controls Iceland supermarkets and the Virgin Active fitness chain in the UK, bought a majority stake in New Look for £780m in May 2015, a deal that valued the retailer’s equity at about £865m. Tom Singh, who founded New Look in 1969, maintains a small stake in the company.

Brait, which is controlled by South African billionaire Christo Wiese, said last September that it was planning to list in London in 2017, by moving its primary listing from Luxembourg to the London Stock Exchange, with a secondary listing in Johannesburg.

This article has been amended since publication to clarify that Brait, not New Look, is planning to list in London.

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