New Look has announced the impending closure of 60 of its UK stores, putting 1,000 jobs at risk.
In light of a persistently challenging retail environment, the high-street giant is proposing a Company Voluntary Agreement (CVA) to creditors.
This would in turn help bring down its rent costs, as well as allow for the revision of terms on current leases.
Should creditors agree to the proposal, New Look will close 60 of its 593 shops in the UK, alongside six sub-let sites which are sub-let. Rent will also be cut in an additional 393 locations.
Creditors are set to vote on the proposal on 21 March.
In the meantime, New Look has affirmed that all of its locations will remain open.
Alistair McGeorge, Executive Chairman of New Look, said: “Given our challenged trading performance and over-rented UK store estate, we are having to take tough but necessary actions to reduce our fixed cost base and restore long-term profitability.
“We have held constructive discussions with our key landlords and strategic partners and will now seek creditor approval on our CVA proposal. A priority for us is to keep all potentially affected colleagues informed during this difficult time.”
Retailers such as New Look are increasingly struggling to adapt to changing consumer patterns, with customers looking towards the ease of online platforms of competitors such as Boohoo and Misguided.
This in turn has led to sharp fall in footfall in recent years putting greater pressure on the high street, as reflected by the latest ONS retail figures.
What’s more, shoppers have also proved more cautious in light of rising inflation levels, which continues to outpace wage growth.
Daniel Butters, partner at Deloitte, commented: “The retail trading environment in the UK remains extremely challenging, driven by weaker consumer confidence, the implications of Brexit and competition from online channels.
“It is important to stress that no stores will close on day one, and employees, suppliers and business rates will continue to be paid on time and in full.”
New Look’s announcement follows the collapse of two other UK high-street retailers last week.
Toys R Us and Maplins both announced falling into administration, as both companies failed to find a prospective buyer in time.
