New Look’s share of the UK clothing market has fallen to 2.6 per cent for calendar year 2016 – from 2.7 per cent in 2015.
Stores have failed to drive the necessary footfall to return its like-for-like performance to positive territory, with year-to-date (39 weeks to 24 December 2016) UK like-for-likes are down 7.3 per cent with the likes of Next, Primark and Matalan also finding it tough to grow organic stores sales during 2016. Moreover, weaker sales and significant levels of discounting throughout the year led to a 32.6 per cent decline in underlying operating profit to £111.5 million, bringing margins down 4.2 percentage points to 9.8 pr cent.
The strength of the online competition has dampened the appeal of New Look’s physical stores.
The fashion-led product mix, attractive pricing and inspiring shopping experience at the likes of boohoo.com, Missguided and Asos continue to encourage New Look’s core shopper base to browse and shop more online reducing the need to visit physical stores. This shift has benefited New Look’s online platform as has its investment in product styling, delivery options and editorial content.
The double digit growth in online sales highlights that the problem does not lie with product – it is the number of stores New Look operates and their lack of responsiveness during periods of unseasonal weaker.
Store closures, enhanced visual merchandising, increased product newness and adapting its seasonal mix and phasing is essential to return like-for-likes to growth and limit the threat of the online pure-plays.
- Honor Strachan is lead analyst with GlobalData.