When New Look founder Tom Singh opened the doors of his first shop in Taunton in 1969, he did so with a rag-trader’s self-confidence in picking best sellers. Over the years he has put the fashion chain’s rise in popularity down to his instinct for picking fashion winners and overhauling supply chains in Asia, which meant he got his trend-led clothes on shop shelves faster than his rivals. In short, New Look was the original fast-fashion pioneer.

However, last week the chain Singh started reported its fifth quarter of poor sales, revealing just how far it has fallen from its days at the forefront of retailing, and sparking concerns about the debt-ridden business.

Even worse, and no doubt to Singh’s horror, New Look has confessed to the cardinal sin of retailing – failing to sell what the customer wants to buy.

Anders Kristiansen, the Dane who has led the business since 2013, admitted that once again New Look’s “product could be better” as he revealed a 7.5pc drop in like-for-like sales during the three months to June 24.

While fashion retailing has been a tough market for all competitors, New Look’s results over the past year have revealed that it is woefully under-performing in the wider fashion market, putting its position as Britain’s number one shop for women under 35 on shaky ground.

New Look’s self-inflicted problems have been made significantly worse by intense competition from its more nimble rivals Asos, Boohoo and Zara, who use short and local supply chains to swiftly respond to fashion trends and customer demands.

The majority of New Look’s products are made in China and Indonesia, meaning it takes 12 weeks to get products on shelves, although 8pc of goods come from Turkey, which means significantly shorter lead times of just 10 days.

The company has said it would like to increase its British manufacturing from 1pc to 10pc, partly to take advantage of a weaker pound. But Kristiansen is staunchly against increasing its exposure to UK manufacturing until the Government takes action to improve working standards at factories in Leicester, which accounts for a third of textile manufacturing in the UK.

It’s an issue that is a thorny subject for New Look, with Kristiansen firmly believing that the ethical standards of British factories are “far worse than in Asia”. New Look has already been burned by this, as in January it emerged that factory workers in Leicester were being paid as little as £3 an hour to make clothes for the chain. New Look blamed a subcontractor for passing orders on to a rogue factory without its knowledge, and cancelled its contract with the company immediately.

Industry experts argue that New Look’s supply chain is already a well-oiled machine and its real issue remains fixing its product. “It doesn’t matter how quickly a product gets to the shelves if no one wants to buy it,” one remarked.

Kristiansen has already warned the market to brace for another two quarters of falling sales while New Look tries to fix its product problems.

Earlier this year New Look admitted that it had not heavily invested in some fashion trends enough, such as distressed denim, while it has fallen into a pattern of repeating items of clothing, such as vests, in various colours. While a range of safe, reliable basics might be the saving grace for Marks & Spencer’s rehabilitation, this move lacks any appeal for twenty-something shoppers. Because it has bored its shoppers with bland choices, New Look has been punished by its customers for failing to excite them.

New Look’s own figures reveal that shoppers still visit its stores and website, but those trips fail to be converted into purchases because the products are not inspiring them to part with their hard-earned cash.

“Everything comes back to product”, says independent retail analyst Richard Hyman. “You can talk all day about IT systems and productivity, but if you don’t get the product right then forget it,” he added.


Hyman, like many other retail observers, believes that part of New Look’s problem is that it has taken its eye off the ball with too many distractions, like its recent menswear launch, its rampant expansion in China and its £1.9bn takeover, two years ago, by South Africa’s Brait Group.

While New Look has rapidly opened 110 shops in China to reduce its exposure to the downbeat UK retail landscape, it still has over 592 shops in this country – more than any of its fashion rivals. New Look claims that only 15 of its shops are unprofitable, but having this vast estate means that it faces a much bigger bill as shops suck up huge amounts of cash in staff wages, rent and business rates, which limits the amount that can be invested elsewhere.

New Look has also disappointed investors with its recent online performance after revealing that its own website sales were down 0.6pc, despite online being considered the one scarce area of growth for fashion retail. But, for New Look, competing online has become an even tougher battle, as web digital advertising becomes more and more expensive. At the same time Asos is tightening its grip on the market by ploughing money into technology investments like visual search functions, customer chatbots and strong editorial content to help make its outfits millennial-friendly.

One of the biggest drivers of online sales continues to be discounting, but New Look boss Kristiansen has so far taken the approach to try to wean customers off the discounting drug and refused to have constant promotions. So far, it seems like a losing battle.

The retailer is also coming under pressure this year as it has also suffered a jump in import costs, which has left it nursing a £70m hit following the slump in sterling after the EU referendum result.

The falling sales, profits and earnings are making investors nervous, resulting in New Look’s publicly traded bonds plunging to a record low last week.

“After another disappointing set of results and our concerns that much of the UK margin decline is structural, we retain our negative credit opinion on New Look,” said Simon Cowie, high yield bond analyst at Société Générale.

The company’s debt mountain has grown to £1.2bn over the past year, which largely is a hangover of the debt-fuelled leverage buy-out by private equity firms Apax and Permira in 2004. However, if New Look’s earnings continue to slide, its ratio of debt to earnings will soon look untenable.

The fashion stalwart’s hopes lie in its recent boardroom recruits, where it is hoping to steal more than a sprinkle of retail fairy dust from high street champion Zara. Former head of design Steven Andrews, design director Emma Worley, menswear boss Christopher Englinde and footwear director Amanda Wain have all been shown the door in the last 18 months.

However, the biggest shake-up has been the departure of Roger Wightman, Singh’s right-hand man for almost 27 years, who has been replaced by former Zara basic head of product Paula Dumont Lopez.

Kristiansen has said of Dumont Lopez that: “She has a lot of energy, passion and love for product.”

With one of the biggest store estates in retail, New Look will be hoping that the same approach can be taken to restore its fast-fashion reputation before the rot sets in for good.