FINANCIAL ANALYSIS

New Look Retail Group, PLC

New Look Retail Group, PLC

New Look is a private group, which operations involves retail business of women's wear and apparels. The group sells branded accessories, footwear and accessories for both men and women. It serves over 120 markets globally. The group primarily operates in the UK, Ireland, Europe, Middle East, Singapore, Russia and Poland. Its headquarters is at Dorset, United Kingdom, it has around 23,939 employees.

In the United Kingdom, New Look is the second largest women's wear and accessories retailer with 5.8% value share. It is also the largest retailer by value in the United Kingdom's Women wear and accessories market.

The fiscal year 2011, has undoubtedly been challenging for the New Look. It required year of FY11 has undoubtedly been one of challenge, requiring the business to navigate through a difficult period. The relocation of central buying, merchandising and design teams from Weymouth to central London in late 2009 caused significant disruption during the subsequent transition period, the impact of which was exacerbated by deteriorating macro-economic conditions and increased inflationary pressures across the supply chain. Despite these challenges, New Look has built a strong platform for future growth and remains committed to achieving its long-term ambition of becoming a truly international value fashion retailer.

The below par performance of New Look retail store in the United Kingdom has raised concerns for the top-management. In an increasingly crowded marketplace, where many retailers today are establishing themselves as 'low cost', and at a time when consumer priorities are tilting more towards price and quality, New Look is setting its sight to focus more on delivering best value for money - i.e. a winning combination of price, superior quality and must have fashionability, not just lowest price.

The revenue figures for the company, in 2011, dropped to 1461.2 million pounds; the revenue figure for 1463.6 million pounds. Before 2011, there was a rising trend in the revenue figures; however, 2011 has produced a not-up to expectation result. The poor performance can largely be attributed to recession and its after-effects on consumer buying behavior. A decline in the business of women's apparels is witnessed throughout the global economy, especially in the turnover of famous retail outlets at United Kingdom. The diagram below the turnover figures for the year 2007 up to the year 2011.

Gross margin for the group has fallen by 2.8% points to 53.9% in FY11 due largely to the tough trading environment and poor product performance experienced during the year which resulted in higher levels of markdown and promotional discount spend. In particular, the adverse weather conditions experienced in December resulted in a rollover of unsold stock into January which failed to clear sufficiently well in the January sale. This was then compounded by a downturn in consumer spending into February and March resulting in an excess of ageing autumn-winter stock which was threatening to impair the launch of new spring-summer ranges. Consequently the decision was taken to return excess autumn/winter stock from most of ...