New Look, the value fashion retailer, has successfully gained the necessary support from its creditors for its company voluntary arrangement (CVA), ensuring that it avoids potential liquidation or acquisition by an online-only retailer. The majority of creditors voted in favor of the CVA which will enable New Look to negotiate lower turnover-based rents for more than 400 stores, as well as benefit from three years of zero rent for nearly 70 additional stores.

Earlier in the week, the fate of the CVA seemed uncertain as some landlords had expressed their intention to oppose it, posing a threat to the required 75% support. However, with the approval of the CVA, New Look can now convert its existing debt into equity, reducing its debt owed to lenders from £550 million to roughly £100 million. In addition, this process will unlock an additional £40 million in funding provided by lenders to support the company’s turnaround efforts.

This positive news arrives as a rare glimmer of hope for the struggling high street, which has experienced widespread job losses and store closures. Following the successful vote, CEO Nigel Oddy expressed his gratitude towards the landlords and creditors for their support. He emphasized the significance of physical stores in the retail market and reaffirmed the company’s commitment to its omnichannel strategy. Oddy stressed that New Look has implemented a successful turnaround plan over the past three years, focusing on offering products with broad appeal, value-led pricing, a more efficient supply chain, and operational efficiencies. The company aims to solidify its position as the preferred fashion destination for individuals aged 25 to 45 as it navigates the challenges stemming from the post-Covid-19 landscape.

The approval of the CVA and the subsequent financial restructuring provide New Look with more financial strength and flexibility. This sets the company up on a sustainable platform for future trading and investment, enabling it to face the uncertain times ahead. New Look remains committed to closely collaborating with landlords and creditors to overcome the challenges that lie ahead in the retail industry.

Useful links:
1. BBC – New Look secures support for company voluntary arrangement
2. The Guardian – New Look secures CVA deal for balance sheet restructuring