UK market 'challenging', says New Look boss
The chief executive of fashion retailer New Look has warned of a "challenging UK market" after his company suffered a 37.6% drop in pre-tax profits in the three months to Christmas.
Anders Kristiansen said "reduced footfall and a highly promotional environment on the high street" had contributed to the figures.
New Look's pre-tax profits were £30.1m in the run-up to the festive period.
Meanwhile, UK retail sales in general grew more slowly in January.
The British Retail Consortium attributed the drop to consumers reining in spending after Christmas.
Despite New Look's fall in profits, total sales rose 0.8% to £422.6m, although like-for-like sales fell by 4.7%.
In the UK, the company opened four more standalone menswear stores, bringing the total to 19, and it also enjoyed record online sales on Black Friday.
Meanwhile in China, where it now has more than 100 stores, the company recorded positive like-for-like sales.
Mr Kristiansen added: "Globally, fast fashion is getting faster. The consumer mindset is shifting, driven by social media, to a 'buy now, wear now' mentality.
"We have responded accordingly by improving our buying processes, working to achieve a faster supply chain, tightening our stock control and strengthening our buying and design teams to deliver a stronger product proposition."
He put the rise in total sales down to good performances outside the UK, online and in menswear, explaining that the fact the company was selling in a variety of places had been crucial.
"It remains key to our growth to continue to diversify our offer and to invest in our priority international markets," he said.
"We are clear on the actions needed to capture customer spend, but these will take time to implement.
"While we expect 2017 to be tough and are setting our plans accordingly, we strongly believe in our ability to continue to execute our strategy."
Honor Strachan, lead analyst at data providers GlobalData, said New Look's shops had lost customers to internet-based rivals.
"The strength of the online competition has dampened the appeal of New Look's physical stores," she said.
"The fashion-led product mix, attractive pricing and inspiring shopping experience at the likes of boohoo.com, Missguided and ASOS continue to encourage New Look's core shopper base to browse and shop more online reducing the need to visit physical stores.
"This shift has benefited New Look's online platform as has its investment in product styling, delivery options and editorial content."
Meanwhile, the BRC figures revealed that general retail sales had inched up 0.1% year-on-year, a big slowdown from the 1.7% increase in December and the weakest performance since last August.
The change was largely because of slower non-food sales, although spending on groceries held up.
The BRC said consumers were feeling cautious going into the new year.
"Looking across the last three months, we've seen the slowest growth of the festive period since 2009," BRC chief executive Helen Dickinson added.
"After a strong end to the Christmas trading, year-on-year sales growth ground to a halt.
"While this may appear disappointing overall, retailers were up against a strong January last year to try and deliver a repeat performance and many reported an increase in the number of returns received in January."
According to the research, consumers had cut back on non-essentials, although sales of furniture climbed towards the end of the year.
Spending on food rose 2% in the quarter, while online sales jumped 8.6% as more shoppers shunned the high street.