Fashion chain New Look is to focus on expanding in China and Poland but will pull out of Russia and Ukraine amid political instability in the region.
Anders Kristiansen, New Look’s chief executive, said he expected to complete the closure of 20 stores in Russia and six in Ukraine in the next few days. In August the retailer said it had “paused” expansion in Russia.
“We took the decision four to six months ago when the political issues erupted. Since then the retail environment has been going through a tough period,” Kristiansen said.
He added that many other retailers were also “really suffering” in the region.
“With the market uncertainty it didn’t feel right and the other point is that we have got China performing really well, so why not channel money there,” he said.
Kristiansen said the exit from Russia did not mark a slowdown in international expansion plans. “Our aim is to build a global brand and we continue to execute that strategy,” he said.
The retailer, which is in the process of selling its Mim chain in France, has also recently exited stores in Morocco and Thailand, and expects to have 20 stores in China by the end of its financial year in March. It already has about 30 sites lined up for next year.
Strong sales in China helped offset a slowdown in sales in the UK amid unseasonably warm weather.
Sales growth at established stores dropped from 9.1% in the three months to the end of July to just 2.4% in the following quarter. Total sales rose 4.7% to £753.2m and underlying profit rose 18.5% to £70.9m in the six months to the end of September as the group reduced losses at Mim.
“There are huge opportunities [in China]. The first step will be 300 stores and then we will go from there,” said Kristiansen, who previously ran more than 6,000 stores in China for Danish brand Bestseller.
Since he arrived at New Look last year, Kristiansen said he had tried to simplify its overseas business and focus on markets where it could find major expansion. He said the retailer expects to add four more stores in Poland by April on top of the 11 already in place. It is also opening concession outlets in Germany.
Sales via the internet rose 36.4% in the six months to 27 September helped by strong sales via Asos as well as New Look’s own website.
