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UK market 'challenging', says New Look boss | UK market 'challenging', says New Look boss |
(35 minutes later) | |
The chief executive of fashion retailer New Look has warned of a "challenging UK market" after his company suffered a 37.6% drop in pre-tax profits in the three months to Christmas. | The chief executive of fashion retailer New Look has warned of a "challenging UK market" after his company suffered a 37.6% drop in pre-tax profits in the three months to Christmas. |
Anders Kristiansen said "reduced footfall and a highly promotional environment on the high street" had contributed to the figures. | Anders Kristiansen said "reduced footfall and a highly promotional environment on the high street" had contributed to the figures. |
New Look's pre-tax profits were £30.1m in the run-up to the festive period. | New Look's pre-tax profits were £30.1m in the run-up to the festive period. |
Meanwhile, UK retail sales in general grew more slowly in January. | Meanwhile, UK retail sales in general grew more slowly in January. |
The British Retail Consortium attributed the drop to consumers reining in spending after Christmas. | The British Retail Consortium attributed the drop to consumers reining in spending after Christmas. |
'Fast fashion' | |
Despite New Look's fall in profits, total sales rose 0.8% to £422.6m, although like-for-like sales fell by 4.7%. | Despite New Look's fall in profits, total sales rose 0.8% to £422.6m, although like-for-like sales fell by 4.7%. |
In the UK, the company opened four more standalone menswear stores, bringing the total to 19, and it also enjoyed record online sales on Black Friday. | In the UK, the company opened four more standalone menswear stores, bringing the total to 19, and it also enjoyed record online sales on Black Friday. |
Meanwhile in China, where it now has more than 100 stores, the company recorded positive like-for-like sales. | Meanwhile in China, where it now has more than 100 stores, the company recorded positive like-for-like sales. |
Mr Kristiansen added: "Globally, fast fashion is getting faster. The consumer mindset is shifting, driven by social media, to a 'buy now, wear now' mentality. | |
"We have responded accordingly by improving our buying processes, working to achieve a faster supply chain, tightening our stock control and strengthening our buying and design teams to deliver a stronger product proposition." | |
He put the rise in total sales down to good performances outside the UK, online and in menswear, explaining that the fact the company was selling in a variety of places had been crucial. | |
"It remains key to our growth to continue to diversify our offer and to invest in our priority international markets," he said. | |
"We are clear on the actions needed to capture customer spend, but these will take time to implement. | "We are clear on the actions needed to capture customer spend, but these will take time to implement. |
"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." | "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." |
Increased returns | |
Meanwhile, the BRC figures revealed that general retail sales had inched up 0.1% year-on-year, a big slowdown from the 1.7% increase in December and the weakest performance since last August. | Meanwhile, the BRC figures revealed that general retail sales had inched up 0.1% year-on-year, a big slowdown from the 1.7% increase in December and the weakest performance since last August. |
The change was largely because of slower non-food sales, although spending on groceries held up. | The change was largely because of slower non-food sales, although spending on groceries held up. |
The BRC said consumers were feeling cautious going into the new year. | The BRC said consumers were feeling cautious going into the new year. |
"Looking across the last three months, we've seen the slowest growth of the festive period since 2009," BRC chief executive Helen Dickinson added. | "Looking across the last three months, we've seen the slowest growth of the festive period since 2009," BRC chief executive Helen Dickinson added. |
"After a strong end to the Christmas trading, year-on-year sales growth ground to a halt. | |
"While this may appear disappointing overall, retailers were up against a strong January last year to try and deliver a repeat performance and many reported an increase in the number of returns received in January." | |
According to the research, consumers had cut back on non-essentials, although sales of furniture climbed towards the end of the year. | According to the research, consumers had cut back on non-essentials, although sales of furniture climbed towards the end of the year. |
Spending on food rose 2% in the quarter, while online sales jumped 8.6% as more shoppers shunned the high street. | Spending on food rose 2% in the quarter, while online sales jumped 8.6% as more shoppers shunned the high street. |