New Look, the privately owned value fashion chain, is poised to enter China within the next year even as it prepares to refinance its more than £1bn debt pile.
Anders Kristiansen, the new chief executive, said the group planned to have its first store in China in early spring next year. Mr Kristiansen joined New Look in January from Bestseller, the Danish fashion group that operates the Vero Moda and Jack & Jones brands, where he was running its 6,000 stores in China. Given that Mr Kristiansen has spent the past 10 years in China, New Look plans to enter China alone, rather than through a joint venture as it had previously planned. Mr Kristiansen said Chinese shoppers were “keen for the latest fashion at a good price” as well as “a western brand with a British heritage”. New Look last year explored entering the fast-growing Chinese fashion market with a partner, but a deal never came to fruition. “With Anders joining it’s changed our perspective,” said Alistair McGeorge, executive chairman of New Look, who is two years into a turnround plan for the retailer, which parted company with its chairman and chief executive in 2011.
Mr Kristiansen said New Look, which is putting a team on the ground in China, was eyeing tier-one Chinese cities, including Beijing and Shanghai. Initially it is looking at about five to 10 stores – requiring a £10m-£20m investment – before embarking on a broader roll-out. Mr McGeorge said entering the market at a time when there may be concerns about the strength of the Chinese consumer was not an issue. “If anything, the consumer would want to get a better deal, and that’s exactly what we are offering,” he said.
New Look is also eyeing a move into India, although this is likely to be with a joint venture partner. The comments come as New Look, which is owned by private equity groups Apax and Permira, as well as founder Tom Singh, is taking the first step towards a refinancing of its £1.1bn of net debt, including £750m of payment in kind notes. Mr McGeorge said that if New Look pushed ahead with the refinancing, it was likely to tap the bond markets. It would also look to replace any remaining Pik notes with another financial instrument, such as high-yield debt or mezzanine finance. However, he said the refinancing was not the prelude to an imminent exit. A sale or float of New Look – which pulled its planned £1.7bn-£1.8bn listing three years ago – would be at least another three to five years away, giving the company time to pay down debt and complete its turnround plan.