Brait narrows losses on New Look recovery. A turnaround strategy helped the UK womenswear chain post a first-half profit

as it regained market share and cut costs.

Brait reported smaller losses for the six months to end-September thanks to an

improvement at ailing UK womenswear chain New Look.

The investment group reported 3.59 rand billion in investment losses for the

period, less than half last year's 7.98 rand billion loss. Its headline loss

reduced to 668c per share from 1,577c a year ago. Its net asset value declined

by 1.1% to 55.23 rand per share.

It reduced the carrying value of New Look to zero last year and said it would

keep it there until its turnaround strategy had taken shape. At the time, it

said the chain had moved away from its core market and its value proposition.

It was also late to introduce certain trends and was unable to clear some of

its ranges as a result. New Look's CEO Anders Kristiansen stepped down last

September and Alistair McGeorge, who oversaw a turn-around and recovery

between 2011 and 2014, returned to the group as executive chairman. Founder

Tom Singh also agreed to a more active product role.

For the period, New Look more than doubled earnings before interest, tax,

depreciation and amortisation (EBITDA) to 49.8 million as it increased market

share and focused on more profitable online sales. It said annual cost savings

of 70 million had been identified and it had recognised 31.7 million in its

interims results. New Look is busy exiting China, which Brait says will allow

it to focus on core trading. A review of other international markets is

ongoing.

Among its other investments, Virgin Active reported a 6% decline in EBITDA

after it opened more gyms and had to recognise increased commission costs and

start-up expenses up front. Food group Premier grew EBITDA by 10%. Iceland

Foods in the UK reported a 21.5% decline in EBITDA due to increased staffing

costs due to regulatory wage increases, higher fuel prices and improvements to

its distribution network.

New Look continues to make good progress in delivering improved operational

and financial stability with increasing UK market share demonstrating its

strengthened breadth of appeal," Brait said. "Although womenswear clothing

performance is improving, key challenges in footwear and accessories remain."

Brait's shares declined 1% to 38.10 rand yesterday.