The weakness of a UK High Street under siege from online retailers was laid bare today by the contrasting fortunes of two fashion brands.
High street chain New Look, which announced 60 store closures across the UK in March, swung to a full-year loss amid plunging sales both in its stores and online.
Online powerhouse Boohoo meanwhile posted soaring sales in the first quarter and is pushing ahead with ambitious expansion plans.
Tale of two retailers: High Street stalwart New Look (whose clothes are modelled left) is struggling while its online rival Boohoo (modelled right) is forging ahead.
New Look reported an operating loss of £74.3million for the year to March 24, having made £97.6million profit in the previous year.
Its sales in the UK fell by 11.7 per cent on a like-for-like basis, accelerating from a decline of 6.8 per cent the year before. Website sales slumped by a hefty 19.2 per cent.
Group sales at Boohoo – which also owns the Pretty Little Thing and Nasty Gal brands – jumped 53 per cent to £183.6million in the three months to May 31.
Sales in the UK jumped 49 per cent, up from £74.6million to £110.7million, while its sales in the US were up 75 per cent to £31.4million.
Despite the strong sales growth, Boohoo’s shares fell by 4.1 per cent in early trading to 211p – probably because the company is spending a lot on infrastructure and expansion, something investors often view as risky.
Alistair McGeorge, New Look’s executive chairman, said: ‘Last year was undoubtedly very difficult for New Look, with a well-documented combination of external and self-inflicted issues impacting our performance.
‘Trading conditions will remain tough in the year ahead, but further operational efficiencies and a resolute focus on our core strengths and heartland customer will help to ensure we remain on the right track.’
New Look launched a restructuring plan in March, announcing that it would shut 60 stores as part of a Company Voluntary Agreement, affecting 980 jobs.
Poundworld crashed into administration yesterday putting 5,100 jobs at risk.
The company said on Tuesday that the CVA would allow the business to save £40million.
The poor trading news from New Look comes amid something of a crisis for the UK High Street. House of Fraser has proposed a CVA, saying it intended to shut 31 stores, putting 6,000 jobs at risk.
Mothercare and Carpetright have also undertaken CVAs so far this year in a bid to save on costs.
Torrid trading on the high street has triggered a swathe of retail failures, with Toys R Us, Maplin and Poundworld all entering administration.
In contrast, Boohoo said it expected to grow full-year revenue by between 35 per cent and 40 per cent, with underlying earnings expected to rise by up to 10 per cent.
Mahmud Kamani and Carol Kane, joint chief executives of Boohoo, said: ‘Our infrastructure continues to see record levels of investment as we invest ahead of our growth curve and develop a distribution network capable of supporting £3billion of net sales globally.’
They said the company’s extension and automation of its Burnley distribution centre would be finished by the end of the financial year, and that Pretty Little Thing would move into its own warehouse in the second half of the year.