LONDON — New Look, the British fast-fashion retailer, is planning a $1 billion initial public offering on the London Stock Exchange in a bid to raise money for U.K. store expansion and refurbishment, international growth, e-commerce and a broader product offering.
This story first appeared in the February 3, 2010 issue of WWD. Subscribe Today.
The planned IPO, which New Look revealed Tuesday, is intended to raise 650 million pounds, or $1.03 billion at current exchange, to fund expansion and reduce debt. The retailer, owned by the private equity groups Apax Partners and Permira, said there is also a possibility of a limited secondary offering of shares by New Look’s existing shareholders.
A date has yet to be fixed for when the shares will start trading on the London Stock Exchange.
New Look, which until 2004 was listed on the London Stock Exchange, is the U.K.’s second largest women’s clothing and accessories retailer by value, and operates 1,010 stores. In the year to March 2009, the company recorded revenues of 1.32 billion pounds, or $2.1 billion, and earnings before interest, taxes, depreciation and amortization of 217.6 million pounds, or $346.3 million.
Analysts were upbeat about the news.
Nick Bubb, retail analyst at Arden Partners in London, said he is “all for” the planned listing, describing it as “a very important test of sector sentiment. Everyone hates the idea of buying something at the top of the market, but to be at the value end of the market is a good place to be seen to be,” he said. “New Look has shown solid growth — if it can continue to do that, then it looks attractive at the price being mentioned.”
Luca Solca, senior research analyst at Sanford Bernstein, said he is “positive about apparel discounters and their opportunity to grow in continental European markets.”
Analysts say the market value of New Look could land between 1.7 billion pounds and 2 billion pounds, or between $2.71 billion and $3.19 billion, but a spokeswoman for New Look described those figures as “market speculation.”
The planned listing follows an unsuccessful attempt by New Look’s owners to sell the company in 2007. It was eventually taken off the block after failing to achieve its $3.7 billion asking price.
The chain was taken private in 2004 by Apax and Permira, together with New Look’s founder Tom Singh. “New Look has doubled its space since 2004 and the group continues to perform strongly,” stated New Look chairman John Gildersleeve. “The group is well positioned to continue this growth as a public company.”