Photo/Wang Fan

Dec. 11 (NBD) -- UK-based fast fashion chain New Look, which is owned by South African investment firm Brait, is poised to exit China, just over four years after entering the country. 

The struggling fashion retailer said via its official WeChat and Weibo accounts as well as Tmall flagship store on Monday evening that all its stores across China will be soon shut down. Final stock-clearance sales were announced as well, coming with a reminder that the company won't refund or change items unless there are quality issues. 

In a field visit to a brick-and-mortar New Look store in Guangzhou, NBD found the store is offering generous discounts and a blouse carrying a price tag of 179 yuan (25.9 U.S. dollars) is now sold for only 10 yuan (1.4 U.S. dollars). A shop worker told NBD this store is scheduled to close on December 26. 

Three other New Look stores in the southern city had wound up their business, according to information shown on local life service platform Dianping. 

As early as October 18, the fashion chain announced the decision to shut down its remaining 120 stores in China by the end of December 2018, with the Shanghai head office to close shortly after. Despite substantial investments in China in recent years, performance has been below expectations and the retail business has not achieved the necessary sales and profitability to support the significant future investment required to continue these operations, the company stated in the announcement. 

New Look started operations in China in 2014. Two years later, the high street clothing retailer announced plans to open a total of 500 stores across the country in three years, aiming to catapult itself into the same league in China as the world's top fashion chains - Japan's Uniqlo, Spain's Inditex and Sweden's H&M.

Tang Xiaotang, an analyst with fashion watcher No Agency, said to NBD the fast fashion market still has growth potential but New Look entered China a little later, thus having a relatively weak brand awareness among consumers compared with its rivals. 

In addition, the involvement of one of parent company Brait's shareholders in an accounting scandal dealt a heavy blow to the fashion chain. 

In the short run, store closures and cost savings seem to be the major measures to help New Look stay afloat. Even in the UK, the chain is trying to slash operating costs by shutting down stores. 

According to the financial results for the first half of fiscal year 2019 ended September 22, 2018, New Look Retail Group Limited's revenue dropped 4.2 percent year over year to 656.9 million pounds (839.6 million U.S. dollars). For the period, like-for-like sales of the New Look brand fell 3.7 percent from the same period of fiscal year 2018. Adjusted EBITDA increased to 49.8 million pounds (63.7 million U.S. dollars), supported by cost savings. 

Alistair McGeorge, Executive Chairman of New Look, said in the financial report, "The decision to exit our stores in China was a difficult one but was right for the business to ensure we are well positioned for sustainable and profitable growth.

In reality, New Look is not the only British fashion retailer to leave the Chinese market. 

In August this year, Topshop, the fashion brand controlled by Sir Philip Green's Arcadia Group, announced it had reached a mutual agreement with its Chinese partner Shangpin to an early termination of their franchise agreement.

Email: lansuying@nbd.com.cn