Annual Report
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NEW LOOK RETAIL HOLDINGS LIMITED 128640 ANNUAL REPORT 2019/2020 NEW LOOK RETAIL HOLDINGS LIMITED 2 ANNUAL REPORT & ACCOUNTS CONTENTS Group Overview 4 Non-Executive Chairman’s statement 7 Chief Executive Officer’s statement 9 Strategic report 12 Year in review 13 Our business model 14 Our customer strategy 15 Financial review 16 Risks and uncertainties 21 Corporate social responsibility 26 Directors’ report 32 Directors’ report 32 Directors’ responsibilities for the financial statements 37 The Board of Directors 38 Financial statements 40 Independent auditors’ report 42 Financial statements 50 3 NEW LOOK RETAIL HOLDINGS LIMITED GROUP OVERVIEW New Look is a leading value-fashion multichannel retailer in the United Kingdom (“UK”) and the Republic of Ireland (“ROI”) with an online business covering key international markets We are No. 2 for overall Womenswear market share in the 18 to 24 and 18 to 44 age ranges1 At 28 March 2020 we traded from 505 stores in the UK and ROI Our online platform serves customers in 68 countries, with over 200 million visits per year Financial restructuring completed on 3 May 2019, resulting in the acquisition of New Look Limited and its subsidiaries2 and consolidation of trading results from this date 1 Based on Kantar Worldpanel published data 52 weeks ended 3 May 2020 (Womenswear by value) 2 Subsidiaries of New Look Limited include, New Look Retailers Limited, New Look Retailers (Ireland) Limited, New Look Retailers (CI) Limited, New Look Commerce (Shanghai) Co., Ltd, New Look (Singapore) PTE Ltd, New Look Germany GmbH, Geometry Properties Limited, Weymouth Gateway Property Management Limited, (Top Gun Realisations 95 Limited and Top Gun Realisations 96 Limited, both liquidated on 11 August 2020). 4 ANNUAL REPORT & ACCOUNTS Total revenue was £912.8 million Gross margin was 45.9% Adjusted EBITDA3 was £132.2 million Statutory loss before tax was £430.7 million Net debt, excluding lease liabilities, as at 28 March 2020 was £443.0 million The Covid-19 pandemic has had a significant impact on our business. Whilst we have thus far navigated through it, the potential for further disruption is difficult to predict and beyond our control During FY21 we obtained creditor approval for a CVA, which moved the majority of stores to a turnover rent-based model, increasing the flexibility within our cost base. We also completed a second financial restructuring, further deleveraging the balance sheet and providing a capital injection to support future investment in our strategy, see note 36 for details 3Adjusted EBITDA, a non-IFRS measure, is calculated as underlying operating profit/(loss) before depreciation and amortisation. A reconciliation of operating loss to adjusted EBITDA can be found on page 51. 5 NEW LOOK RETAIL HOLDINGS LIMITED 6 ANNUAL REPORT & ACCOUNTS NON-EXECUTIVE CHAIRMAN’S STATEMENT This report and its financial I would like to formally welcome the new non-executive statements relate to the year members of the Board. Richard Cotter, Colin Henry, Angela ended 28 March 2020, and it was Luger and Robin Terrell, who joined New Look following during Q4 that the advent of the completion of the 2019 Transaction and who have brought Covid-19 pandemic began to have a wealth of retail experience, across stores and online. As a a material impact on our business. business we are already benefiting from their knowledge and a We have since been consumed fresh perspective as we embark on the next stage of our journey. by the effects that the pandemic is I am delighted that Paul Gilbert and Richard Collyer remain on having on all our lives and the way the board and provide continuity, with their knowledge of New we operate our business. The impact of Covid-19 has been Look’s recent performance, challenges and achievements. I significant and should not be under-estimated. Whilst we have would also like to welcome Stuart MacKenzie who joined us thus far navigated through it, we have no experience of a similar on 24 March 2020 as the new representative from Brait and situation and it is difficult to accurately forecast the longer-term Laurence Raven who joined us on 9 November 2020. impact that this pandemic will have on the retail market and our We were also able to further attract new talent into the business. business. I would like to take this opportunity to thank all my Helen Connolly, Chief Commercial Officer, and Clare Dobbie, New Look colleagues, the Board and our stakeholders for their Chief Customer Officer, joined us in January 2020, to further support during this time. support our transformation. Looking back at the period we are reporting on, the Company Since the end of the year we have further strengthened our was incorporated on 27 March 2019 as part of a wider capital structure and reduced our operating cost base, see restructuring of the New Look group (previously New Look note 36. This, combined with the significant progress made Retail Group Limited and its subsidiaries, “the old Group”). in delivering operational improvements, our customer strategy The financial restructuring completed on 3 May 2019 (“the finalised and new hires made, gives me confidence in New 2019 Transaction”). As part of the 2019 Transaction, New Look’s future under Nigel’s leadership, as the retail landscape Look Limited and its subsidiaries1 were acquired by New Look continues to change and as we await further clarity on the Bonds Limited, a wholly owned subsidiary of the Company. impact of Brexit. Completion of the 2019 Transaction provided our people and suppliers with renewed confidence in our business. The right capital structure provided us with the financial flexibility to better attack our future amid challenging market conditions, before the onset of Covid-19. Alistair McGeorge In April 2019 we welcomed Nigel Oddy as Chief Operating Non-Executive Chairman Officer. Since then, he has been running the business 12 November 2020 operationally and over the last 20 months has made significant improvements to our buying, product, supply chain and omnichannel offer as we set out our future customer strategy to take New Look to the next stage of its journey. He was deservedly promoted to Chief Executive Officer on 1 January 2020 and joined the Board. At this point I assumed the role of Non-Executive Chairman. 1Subsidiaries of New Look Limited include, New Look Retailers Limited, New Look Retailers (Ireland) Limited, New Look Retailers (CI) Limited, New Look Commerce (Shanghai) Co., Ltd, New Look (Singapore) PTE Ltd, New Look Germany GmbH, Geometry Properties Limited, Weymouth Gateway Property Management Limited, (Top Gun Realisations 95 Limited and Top Gun Realisations 96 Limited, both liquidated on 11 August 2020). 7 NEWNEW LOOK LOOK RETAIL RETAILERS HOLDINGS LIMITED LIMITED 8 ANNUAL REPORT & ACCOUNTS CHIEF EXECUTIVE OFFICER’S STATEMENT New Look has been a key player We recognise the importance of our customers, locality and in the retail market for over 50 accessibility. The product we sell will always be relevant to years and I am delighted to have these customers. We will make every shopping experience been appointed CEO at such a a special and convenient one, whatever the channel our pivotal moment in the Group’s customer chooses. development. The year hasn’t Our strategy is being delivered under 3 key pillars: come without its challenges, with the uncertainty around Brexit, an election in December 2019 and Product Relevance the onset of Covid-19 in Q4. However, despite all of this, we have made headway during the year, improving our financial Customer Experience position and seeing an improving trend in trade quarter by quarter, before the onset of Covid-19. Integrated Omnichannel Before reviewing FY20 and subsequent key events in further detail, I would like to take this opportunity to thank all my Delivery of our strategic pillars will be supported by the colleagues for their unwavering commitment, enthusiasm Operational Excellence we have in our well-established and hard work during what has been – and continues to be infrastructure, where we have seen the most improvement – an extremely challenging period as we all grapple with the this year. effects that the Covid-19 pandemic is having on our lives and our business. My colleagues are the heart of New Look and are the key to bringing this strategy to life. Since joining, I have visited Achievements During FY20 over half of our stores across the UK and Ireland, and both Since joining the business in April 2019, we have focused on the distribution centre in Lymedale and our support centre strengthening our operational foundations and investing in in Weymouth on a number of occasions. I have been our people. We have taken decisive steps in a number of areas overwhelmed by the passion and pride colleagues have for our and during the year we finalised our customer strategy and brand and the dedication and resilience they continue to show delivered a vision and set of values that have been embraced in the most challenging retail environment we have ever seen. by our people. I am confident that with a complete focus on who our customer Today our customers want a brand that makes them feel good, is - understanding what she wants and offering her product that happy and confident - just as they did when New Look was is relevant and good value - together, we will make New Look founded in 1969. They want to feel more ready for the day a key player in the fashion market once again. We will deliver ahead and want a brand that is affordable, convenient and fun. the personality and fun that made New Look famous, we will deliver a service proposition that is convenient and second to However, the difference today is that convenience and none in the value fashion sector and will recognise the local accessibility are increasingly important, if not an essential requirements within the product proposition we offer.