New Look Will Make A Debt To Equity Swap With The Debtor.

Britain

The clothing retailer New Look Retail Group Ltd. plans to solve its huge debt problem by March next year. It is known as the "debt wall" plan inside the company. It is said that the debt to equity swap will be made to the debtor, with a view to lighten the debt of 1 billion 300 million, so as to continue to reduce the capital cost and give the main industry a breathing space.

According to the world clothing shoes and hats net,

Up to the end of March, the net debt of the 2018 fiscal year was as high as 1 billion 265 million 400 thousand pounds, with a net increase of 120 million 500 thousand pounds in the period. The new debt came mainly from the revolving credit of 100 million pounds. Besides, the group also signed a 100 million pound liquidity financing agreement with the core creditor bank.

In sharp contrast, the British company ended the end of March with a mere 78 million 300 thousand pounds of free cash flow, with a sharp reduction of 120 million 800 thousand pounds during the period, mainly reflecting a sharp decline in operating profits, resulting in a loss of income.

According to the data, in the 2018 fiscal year, New Look's operating loss was as high as 74 million 300 thousand, compared with the operating profit of 97 million 600 thousand in the 2017 fiscal year. During the period, the group's adjusted EBITDA loss was 10 million 700 thousand pounds, including the one-time cost of 34 million pounds, while the 2017 financial year group adjusted EBITDA to 155 million pounds.

Moodie Moody's, a rating agency, released a report at the end of November, which lowered the rating of corporate family and default probability of British companies. The agency believes that New Look does not have enough cash to maintain its operation and financing costs.

Moodie also predicted that at the end of the current fiscal year end March 2019, the cash flow of the company will be further reduced to 20 million pounds, which is only half of the company's operating cost of 40 million pounds.

Victor Garcia Capdevila, chief analyst at Moodie, said that although the restructuring plan of the new management of New Look has brought certain improvements to the group, the Brait SE (BATJ.J) will not provide liquidity support to the group, and the growth rate of EBITDA is hard to support the existing capital structure and further financing of the company.

In the early November, the China Daily reported that, as of the first half of September 22nd, New Look has doubled its performance after adjustment. It increased from 24 million 200 thousand pounds of 1H in fiscal year 2018 to 49 million 800 thousand pounds. Excluding the cost of withdrawing from the Chinese market, EBITDA continued to grow from 57 million 900 thousand to 29 million 600 thousand pounds in the same period last year, while the continuing business profits were changed from 22 million 200 thousand to 22 million 200 thousand, and 2018 in fiscal year 2018, with a loss of 10 million 400 thousand EBITDA.

In September of last year, New Look would drag the company into the abyss of Anders Kristiansen from the CEO position.

The radical expansion strategy of Anders Kristiansen, which was announced in October, was completely destroyed by the Chinese radical expansion strategy. In October 18th, the company announced its withdrawal from the Chinese market, closing all 107 Chinese stores and opening self operated online stores such as Tmall.com Tmall.

New Look's former merit CEO Alistair McGeorge, which was re elected as chairman last October, has carried out drastic streamlining, including closing the home.

At least 90 stores and exit from the Chinese market are courageous and dominant, so far, in the company's CEO position vacancy, he has two roles.

Despite a continuous improvement in comparable sales, the 1H, New Look in fiscal year 2019 still recorded a 3.7% decline compared with sales, which was better than the 4% decline in the first quarter and 8.6% in the 2018 fiscal year, while sales fell to 656 million 900 thousand pounds by 4.2% from the customs store, and 686 million pounds in the first half of the 2018 fiscal year in the year of Look.

Alistair McGeorge said in its interim report that the interim results reflect continuous improvement in the company's remolding and pformation process, and that the streamlining of the cost strategy has resulted in improved profits. Although the withdrawal of the Chinese market is a difficult decision, it is a correct decision for the company's business and ensures that the company is in a favorable position in order to achieve sustainable profit growth.

However, Alistair McGeorge is still very challenging about the current environment. There are huge resistance and uncertainties in the market, including the UK.

In the first half of the year, New Look women's wear business was improved, and it won 5.6 percentage points of the market, but accessories and footwear business remained pretty low.

Streamlining costs will save the company 70 million pounds a year, and will further save 8 million pounds in the future.

At present, according to the Moodie report, the debt interest of New Look accounts for 80% of the group's profits. If the problem is not solved before the 2020 fiscal year, with the continuous deterioration of the cash flow, the British brand may be unable to weather this round of retail cold winter. The market expects that the majority shareholder Brait SE will remain the key, after which the South African fund has already spent 189 million pounds to buy the company's bonds.

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