High street fashion giant to speed up shop closures after tax raid putting nearly 100 sites at risk
A HIGH street fashion giant is accelerating plans to close nearly 100 stores due to the Autumn Budget tax raid.
New Look is expected to ramp up its store closures programme ahead of April’s National Insurance hike.
Approximately a quarter of the retailer’s 364 stores are at risk when their leases expire, according to The Times.
This equates to about 91 stores, which collectively employ around 8,000 staff members.
The company has restructured its store estate twice in the past six years, reducing its portfolio from around 600 UK stores in 2018.
For the time being, stores remain open as usual, and no final decisions regarding closures have been made.
The move to accelerate store closures is understood to be driven by the forthcoming increase in National Insurance, announced by Chancellor Rachel Reeves in October.
Employers currently pay NICs for most workers earning more than £9,100 a year.
The sum they pay is the equivalent of 13.8% of the employee’s earnings above that threshold.
For an employee earning £30,000, the employer would pay NICs of £2,884.20.
However, in the Autumn Statement, the Treasury announced it would increase the tax rate to 15% and reduce the threshold at which firms must pay to £5,000.
The British Retail Consortium has predicted that these changes will create a £2.3billion bill for the sector.
The Centre for Retail Research (CRR) has also warned that around 17,350 retail sites are expected to shut down this year.
It comes on the back of a tough 2024 when 13,000 shops closed their doors for good, already a 28% increase on the previous year.
Professor Joshua Bamfield, director of the CRR said: “The results for 2024 show that although the outcomes for store closures overall were not as poor as in either 2020 or 2022, they are still disconcerting, with worse set to come in 2025.”
A New Look spokesperson said: “Our store estate is an important part of our business, alongside our best-in-class website and app.
“We have recently invested over £3million in our stores in Greater Manchester to trial new omnichannel initiatives to improve customer experience.
“We also continue to invest in our thriving online platform which has resulted in a strong online sales performance, with volumes significantly outpacing last year and an improved online margin.”
“On occasion we do have to close stores, either due to the landlord’s request or because the site becomes unviable.
“However, we always remain on the lookout for appropriate new opportunities across the country and continue to invest in our existing store estate.”
More than 70 businesses, including Tesco, Asda and Sainsbury’s, told Rachel Reeves in an open letter that the changes announced in the Autumn Budget mean price hikes are a “certainty”.
HISTORY OF NEW LOOK
FOUNDED in 1969 by Tom Singh with a modest loan of £5,000 from his parents, the first shop opened in Taunton, Somerset.
Singh’s vision was simple but revolutionary: to offer the latest fashion trends at accessible prices.
This focus on “fast fashion” proved a winning formula, propelling the brand’s rapid growth throughout the following decades.
By the 1990s, New Look had expanded significantly, growing from 200 to an impressive 1,000 stores.
This period saw the introduction of new lines, including menswear, teen, and maternity wear, further broadening the brand’s appeal.
Embracing the digital age, New Look launched its online store in 2007, bringing its trendy offerings to an even wider audience.
The brand’s success wasn’t confined to the UK. New Look expanded internationally, establishing a presence in numerous countries across Europe, Asia, and the Middle East.
At its peak, the company boasted over 900 stores internationally and employed over 18,000 staff.
New Look’s ownership structure has also evolved over the years. In 2004, the company went private, with founder Tom Singh, chief executive Phil Wrigley, and private equity investors taking the reins.
In 2015, South African investment firm Brait SE acquired a 90% stake in New Look for £780 million, with the Singh family and management retaining the remaining 10%.
Tom Singh himself announced his departure from the company in 2019, marking the end of an era for the brand he built.
MORE JOB LOSSES ON THE WAY
Almost 170,000 retail workers lost their jobs in 2024 after a challenging year for high street firms.
End-of-year figures compiled by the Centre for Retail Research showed the number of job losses spiked amid the collapse of major chains such as Homebase and Ted Baker.
It said its latest analysis showed that a total of 169,395 retail jobs were lost in the 2024 calendar year to date.
This was up 49,990 – an increase of 41.9% – compared with 2023.
It is the highest annual reading since more than 200,000 jobs were lost in 2020 in the aftermath of the COVID-19 pandemic, which forced retailers to shut their stores during lockdowns.
The centre said 38 major retailers went into administration in 2024, including household names such as Lloyds Pharmacy, Homebase, The Body Shop, Carpetright and Ted Baker.
Around a third of all retail job losses in 2024, 33% or 55,914 in total, resulted from administrations.
It recorded that the remainder of the jobs lost were through “rationalisation”, as part of cost-cutting programmes by large retailers or small independents choosing to close their stores for good.
Professor Bamfield added: “The comparatively low figures for 2023 now look like an anomaly, a pause for breath by many retailers after lockdowns if you like.
“The problems of changed customer shopping habits, inflation, rising energy costs, rents and business rates have continued and forced many retailers to cut back even more strongly in 2024.”
Independent retailers, small businesses generally with between one and five stores, shed 58,616 jobs in total during the year.
Experts have said small high street shops could face a particularly challenging 2025 because of Budget tax and wage changes.
Professor Bamfield has warned of a bleak outlook for 2025, predicting that as many as 202,000 jobs could be lost in the sector.
“By increasing both the costs of running stores and the costs on each consumer’s household it is highly likely that we will see retail job losses eclipse the height of the pandemic in 2020.”
Why are retailers closing shops?
EMPTY shops have become an eyesore on many British high streets and are often symbolic of a town centre’s decline.
The Sun’s business editor Ashley Armstrong explains why so many retailers are shutting their doors.
In many cases, retailers are shutting stores because they are no longer the money-makers they once were because of the rise of online shopping.
Falling store sales and rising staff costs have made it even more expensive for shops to stay open. In some cases, retailers are shutting a store and reopening a new shop at the other end of a high street to reflect how a town has changed.
The problem is that when a big shop closes, footfall falls across the local high street, which puts more shops at risk of closing.
Retail parks are increasingly popular with shoppers, who want to be able to get easy, free parking at a time when local councils have hiked parking charges in towns.
Many retailers including Next and Marks & Spencer have been shutting stores on the high street and taking bigger stores in better-performing retail parks instead.
Boss Stuart Machin recently said that when it relocated a tired store in Chesterfield to a new big store in a retail park half a mile away, its sales in the area rose by 103 per cent.
In some cases, stores have been shut when a retailer goes bust, as in the case of Wilko, Debenhams Topshop, Dorothy Perkins and Paperchase to name a few.
What’s increasingly common is when a chain goes bust a rival retailer or private equity firm snaps up the intellectual property rights so they can own the brand and sell it online.
They may go on to open a handful of stores if there is customer demand, but there are rarely ever as many stores or in the same places.