LONDON (Reuters) - Creditors and landlords of New Look overwhelmingly approved the British fashion retailer's restructuring plan at a meeting on Wednesday, enabling it to stave off a potential fall into administration, the company said.
Earlier this month, the chain, owned by South African investment heavyweight Brait (J:BATJ) and saddled with 1.2 billion pounds of debt, said it would seek creditor approval for a Company Voluntary Arrangement (CVA)
The plan will see the closure of 60 of its 593 stores in Britain and reductions in rent, ranging from 15 to 55 percent, and revised lease terms across another 393 stores. It would lead to up to 980 redundancies among its UK workforce of 15,300.
At Wednesday's meeting 98 percent of votes cast were in favour of the restructuring proposals.
“In order to help restore long-term profitability, it is clear we need to reduce our fixed cost base," said Executive Chairman Alistair McGeorge.
"We are therefore pleased to have gained the support of our creditors to address our over-rented store estate."
New Look said the affected stores would likely close within six to 12 months, subject to decisions by individual landlords.
The retailer, which also has 313 overseas stores, is another victim of Britain's brutal trading environment where consumer spending is under pressure as inflation runs ahead of wage rises and with economic uncertainty due to Brexit.
Traditional store groups are also struggling with a boom in online shopping, while early March snow storms also hit demand.
Already this year Toys R Us UK and electronics retailer Maplin have collapsed into administration.
Separately on Wednesday, Carpetright (L:CPRC) said it was seeking to close stores after multiple profit warnings. Baby goods retailer Mothercare (L:MTC) has also warned on profit.
New Look's woes are another headache for South African businessman Christo Wiese, the biggest shareholder in Brait, after a share price crash in Steinhoff International (J:SRRJ) stripped him off his billionaire status.
Wiese backed Brait's bet on the British consumer in 2015 in a 1.9 billion pound deal that put it in a crowded sector competing with fast growing online rivals such as ASOS (L:ASOS) and Boohoo (L:BOOH)
Brait wrote down the value of New Look to zero in November until its "turnaround strategy has taken shape", adding that it remained a committed long-term shareholder.
Last month New Look reported a 72 percent slump in core earnings for the nine months to December.