Investment company Brait’s turnaround plan for its UK clothing retailer, New Look, is paying off as it cuts its losses to €216 million (R3.5 billion) for the six months to end September.
Brait, whose biggest shareholder is retail billionaire Christo Wiese, has shown an improvement as compared to the same period last year, when it reported a €532m loss. In the UK market, New Look said the clothing retailer outperformed the market by 5.6 percent during the period.
“In the 26 weeks to September 22, New Look continued to focus on more profitable sales within the e-commerce channel,” the group said.
New Look increased earnings before interest, tax, depreciation and amortisation (Ebitda) by 106 percent to £49.8m (R922.46m), up from £24.2m compared to last year.
The group said New Look Ebitda for the period was £57.9m, excluding operations in China, which New Look announced last month that it would be exiting as part of its strategic review of international operations.
Brait paid £780m for a majority stake in New Look in 2015. New Look said its franchise revenue declined by 4.2 percent due to planned franchisee store reductions.
In March New Look launched a company voluntary arrangement (CVA), a form of insolvency used to jettison unwanted stores. Under the restructuring plan up to 60 of New Look’s 593 stores were expected to close while the rent on nearly 400 other branches was cut. Brait’s core investments include Virgin Active, Iceland Foods and Premier.
Virgin Active reported 1 percent increase in revenue with Ebitda declining by 6 percent.
The group said Ebitda growth was impacted by the upfront recognition of increased commission costs associated with the substantial growth in sales, new club start-up expenses and adverse exchange rate movements. “Excluding these impacts, Ebitda at constant currency was up 7 percent,” the group said.
In the nine months period, Virgin Active opened five new clubs, with the group now comprising 238 clubs with 1.2 million members across eight countries. Premier reported 10 percent growth in Ebitda for the six months to end September.
The Iceland Foods group said sales in the UK for the 24 weeks to end September 14 grew by 5.1 percent, benefiting from 17 new stores opened in the period. However, Ebitda was down by 21.5 percent.
Brait shares closed 0.96 percent lower at R38.10 on the JSE yesterday.