The economic and political uncertainty in Russia and Ukraine has resulted in the fashion retailer, New Look, closing its stores in the regions.The company has decided to quit its six stores in Ukraine, and 20 stores in Russia.
The stores were operated through a franchise partner and the group previously intended expanding within the country. However, the Ukraine crisis and the increasing political pressure on Russia, with the resultant economic impact have pushed the group to discard its plans.
There is still a single store open in Russia, but it is expected to be closed within the next few days. The contract with the franchise partner in the area has been terminated and New Look will not be liable for a cancellation fee as the partner had not met its performance targets.
This announcement was made during the company’s interim results report, which indicated a 4.7% increase in revenue, to £789m, and an increase in pre-tax profits of 89%, to £26m, for the 26-week period to 27 September.
The company, which is owned by Apax and Permira, has seen an increase of 8% year-on-year, on like-for-like sales. The group was also affected by the warm weather during September. It saw an increase of 9.1% in sales during the first quarter of its financial year, but this decline to 2.4% during the second quarter.
The group may have shelved business in Russia and Ukraine, and closed stores in Morocco and Thailand, but it is positive about Poland and China. New Look plans to have 20 stores operating in China by the end of this year and has also taken to selling online through Alibaba.