The fashion chain New Look is to call time on its international presence by abandoning its entire Chinese operation as it tries to improve the fortunes of its domestic business.
Sky News has learnt that New Look will announce this week that it has appointed the property agent CBRE to find new tenants for many of the 130 stores it occupies in the world’s most populous nation.
The move will mark a retreat from the South African-owned chain’s ambitions of building a vast Chinese shopping empire and will come seven months after New Look secured creditors’ backing to close scores of its UK outlets.
Sources said the retreat from China could be announced as soon as Thursday.
The company is already understood to have shut 20 stores there, with an exit from France, Belgium and Poland – its other international markets – also now on the agenda.
New Look’s overseas operations lost more than £37m in the year to March, compounding its troubles in its home market.
Alistair McGeorge, the retailer’s chairman, had signalled that a retrenchment from China was likely, although the announcement of a full-scale closure of its business there may surprise retail analysts given the rapid growth of the country’s middle classes.
It is not the only British fashion chain to retreat from China, with Sir Philip Green’s Topshop saying in August that it was terminating a franchise agreement with Shangpin, a local partner, “by mutual agreement”.
New Look secured approval in March for a Company Voluntary Arrangement (CVA), a mechanism used by myriad retailers and restaurant chains this year to restructure financial obligations to creditors.
Most of the 60 stores earmarked for closure in New Look’s CVA have yet to be shut, meaning it still has nearly 600 high street outlets across the UK.
New Look is far from the only big retail name to turn towards a radical shrinking of their store portfolios amid rising pressures from online and discount rivals, increased labour costs and a deteriorating outlook for consumer confidence.
Mothercare, Carpetright, Byron, Homebase and Prezzo are among the companies which have used CVAs, often to the consternation of landlords.
New Look’s performance has stuttered during the last two years, with former boss Mr McGeorge returning as its executive chairman last November.
He described the retail environment as “challenging”, and said improving its fortunes would not be an overnight job.
The company has been owned since 2015 by Brait, an investment vehicle headed by businessman Christo Wiese, who also has interests in Virgin Active and the Iceland supermarket chain.
Mr Wiese is also connected to Steinhoff, the South African holding company which has been rocked by a huge crisis over its previous accounts.
Some form of financial restructuring of New Look’s balance sheet remains a likely prospect in the coming months.
New Look and CBRE declined to comment on Wednesday night.