UK fashion chain New Look reached a deal with creditors in the UK to shut its domestic stores during March and announced this week it will close all retail operations across China as part of the company’s wider review of international strategy that comes following its deal with domestic creditors in the UK in early 2018.
In 2013 the retailer announced a push into China as one of the leading initiatives of the then new CEO Anders Kristiansen, who in 2017 left New One following a string of results that disappointed.
New Look announced on Thursday that it was gradually reducing its store count in China and will now close the rest of the 120 locations by the end of 2018. The Shanghai head office for New Look will shut down shortly thereafter, said the company.
Despite large investments across China the last few years, performance remained below expectations and the company did not achieve necessary sales along with profitability to support the substantial future investment needed to continue operations.
The exit from China comes following a large scale-back of the domestic market for the fashion group, where it announced the possibility of closing over 10% of its stores in the UK as part of its voluntary company arrangement or CVA, that it agreed to in March with its creditors.
As the overall retail environment has become very challenging, chains in both the U.S. and UK have had to reach deals with their lenders to avoid being shutdown, including Mothercare in the UK and Sears in the U.S.
The executive chair at New Look Alistair McGeorge said New Look made its difficult decision to pull out of China after it looked at the trading performance of the business for China and the cost of making more investment there to carry on operating in the country.
Other international New Look stores are being strategically reviewed as well.