Young fashion retailer New Look has confirmed that it has agreed a refinancing deal with its banks , giving it until 2015 to pay back it £1.1 billion debt.Concerns over the high street fashion chain refinancing, which is owned by founder Tom Singh and private equity groups Apax Partners and Permira, has been weighing on the company, but this agreement is seen as a cautious vote of confidence in its future.
Its lenders, which include a syndicate of banks, including Royal Bank of Scotland and HSBC have agreed to extend New Look’s debt repayment from 2013 to 2015, enabling the retailer “to focus on strategic objectives and growth".
The news comes as New Look, which has more than 1100 stores in 16 countries, posted a 23 per cent drop in underlying profits to £147 million over the year to March 31, although its performance improved in the second half.
Chief executive Alistair McGeorge said: “New Look is making good progress in its turnaround, delivering on our plan, in what remains a challenging consumer environment. The evidence for this can clearly be seen in our performance in the second half compared to the first.
“Our long-term goal is sustainable growth and we have taken steps to address some of the issues with our capital structure. Clearly there is much that remains to be done, but we are confident that we now have the right strategy in place and are doing what is necessary to continue to make progress through this year and beyond.”
The company added that its £1.1 billion debt had not increased, and that it had £212 million of cash at the end of the year, up from £191 million. Concluding that it will use £100 million of its cash to pay back some of its debt next year. In addition, the retailer also said that it is planning to close up to 100 stores over the next five years to cut costs as it looks to continue its growth online.
With regards to its international business, New Look said that its overseas franchise business continued to perform strongly, beating its budget, increasing store numbers by 54 per cent and that it had entered four new major market clusters with new partners in Indonesia, the Balkans, North Africa and South East Europe.