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China | British Fast Fashion, New Look Withdrawing from China and Closing 120 Stores

Oct 25, 2018.Xueqing DingBeijing, CN
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British fast fashion brand New Look announced the official closing of 120 existing stores in China by the end of December this year along with the closure of the Shanghai HQ office. After entering the Chinese market placing large amounts of investment in recent years, performances had been lower than expected with sales and profitability aims unfulfilled. The investment required to continue in running the businesses could no longer could be supported.  "After reviewing our business performance in China, the large amount of investment required to continue to operate in the market has made it a difficult decision. We unfortunately have to exit the Chinese market. Our priority is to keep all potentially affected colleagues informed during this difficult time.” said CEO Alistair McGeorge.

New Look launched its rapid expansion of the store after entering the Chinese market in 2014. After acquiring 90% of its equity in South Africa's private equity firm Brait SE in 2015, it announced its expansion to 500 stores by 2020. However, in 2017, the brand experienced the departure of the men's clothing director, accessories and beauty director. The former CEO , Anders Kristiansen, in 2017 also left the post when the performance fell. As of the end of March 2018, total sales for the previous fiscal year fell 7.3% to 1,347.8 million pounds, and the basic operating loss reached 74.3 million pounds. The decline in performance over the years has led to a unsuccessful plan for China's expansion, and earlier this year announced that  out of 590 stores in the UK, 10% will be closing.

This is not the first time that British fast fashion brands have been unsuccessful in the Chinese market. Mark & ​​Spencer suffered from operational difficulties after entering the Chinese market in 2008 and officially retreated in 2016. First entering the market in 2013, the business closed in 2016 due to failure of the localization in strategy.
Topshop who has cooperated with China E-Commerce since 2014, also announced in August to cancel its deal. Plans of opening the first independent store in Shanghai this September is also suspended. Choosing the wrong partnership, timing, and failure of localization are the main defeat for the British brands. China's market trends and consumer demand have changed drastically, coupled with the suppression of strong rivals such as ZARA and Uniqlo and local brands. Traditional British practices within the context of the jungle have seemed to require reflection.