New Look Considers Accelerating Store Closures in Response to Tax Increases
The popular clothing retailer, New Look, is said to be considering expediting its store closure program following the recent tax hikes announced in the Autumn Budget. According to reports by The Times, around 90 out of the 364 New Look stores are deemed ‘at risk’ of shutting down once their leases expire, potentially impacting approximately 91 stores and their 8,000 employees. While some store closures were expected due to lease agreements tied to store performance, the tax changes might intensify this process. However, New Look has not officially confirmed these plans, stating that store closures may occur due to various factors beyond their control.
A spokesperson for New Look emphasised the significance of their store network, highlighting their ongoing investments in store innovation and customer experience. The company recently invested over £3 million in trialling new initiatives in Greater Manchester and is set to upgrade 17 additional stores nationwide. Despite occasional closures prompted by landlords or unprofitable sites, New Look remains committed to seeking new opportunities and enhancing its existing store portfolio. Currently, all New Look stores are operational as usual, with no immediate changes expected.
Since 2018, New Look has undergone two store restructuring processes, reflecting shifts in consumer behaviour and market challenges. Despite a decrease in sales by 8.9% to £769.2 million, the retailer managed to reduce its pre-tax loss to £21.7 million for the year ending March 30. The decline was primarily attributed to store closures and a challenging retail environment. The recent tax adjustments announced by Chancellor Rachel Reeves, including an increase in the National Insurance rate for employers and a lower payment threshold, are expected to impact the retail sector significantly.
Industry experts, such as the British Retail Consortium and the Centre for Retail Research, have projected that the new tax measures could cost the sector billions and lead to thousands of store closures nationwide. The Centre for Retail Research anticipates around 17,350 retail sites could shut down in the coming year, following a tough period in 2024 which saw thousands of high street shops cease operations. Professor Joshua Bamfield from the Centre for Retail Research expressed concern over the looming challenges for the retail sector in 2025, citing ongoing uncertainties and economic pressures.
As the retail landscape continues to evolve rapidly, New Look’s potential store closures reflect broader trends reshaping the industry. With a focus on adapting to changing consumer preferences and enhancing digital capabilities, retailers face a delicate balancing act between physical store presence and online growth. The impact of tax changes and market dynamics poses complex challenges for companies like New Look, requiring agile strategies and innovative solutions to navigate an increasingly competitive environment.
In conclusion, the retail sector’s response to economic shifts and regulatory changes underscores the need for strategic resilience and forward-thinking approaches. While New Look evaluates its store portfolio in light of evolving tax policies, the fate of its 90 at-risk stores remains uncertain. As retail players confront mounting pressures and evolving consumer demands, the industry’s ability to adapt and innovate will be crucial in determining future success amidst a dynamic and demanding landscape.