Companies

New Look to accelerate store closures ahead of tax changes

Jan 8, 2025 United Kingdom

The British fashion retailer is reportedly accelerating its store closure campaign ahead of tax rises in the UK’s next budget. It’s feared more retailers will follow in its footsteps

According to media reports, around a quarter of New Look’s 364 UK stores are at risk of closure when their leases expire, raising the prospect of significant job losses across its workforce of around 8,000. While the retailer would have closed some stores anyway, the likely acceleration of closures results from the considerable cost increases announced in the October Budget.

From April, UK employers will be charged National Insurance at 15%, up from 13.8%, and the threshold at which they start paying tax has been cut from 9,100 to 5,000 British pounds. At the time, the minimum wage will rise by 6.7% to 12.21 British pounds an hour and the retail sector’s business rates bill will increase by 140 million British pounds.

In 2018, New Look traded from nearly 600 stores in the UK but has since restructured its store network twice and now trades from 364 stores, all of which are on relatively short leases that link rents to store sales.

In the financial year to the 30^th of March, the retailer narrowed its pre-tax loss to 21.7 million British pounds from 87.8 million British pounds, despite sales falling by 8.9% to 769.2 million British pounds due to “store closures and tough trading conditions”.

Image Credits: queensgate-shopping.co.uk

Store United Kingdom Economy Fashion Retail Tax