New Look, the privately owned value fashion chain, said it plunged to a £55m pre-tax loss last year, as it amended the deal covering its £1.1bn of net debt.
Alistair McGeorge, executive chairman, said the so-called amend and extend deal gave New Look “the time and space to improve the business and to come up with a solution” for its debt, which includes £700m in payment-in-kind notes.
New Look, owned by founder Tom Singh and private equity groups Apax and Permira, made a pre-tax loss of £54.5m in the year to March 24 2012, compared with break-even in the year earlier period.
The retailer, which parted company with its chief executive Carl McPhail in March 2011, said it had been hit by a fall in earnings before interest, tax, depreciation and amortisation from £191m to £147m.
It also took £12m of exceptional items, for onerous leases and writing down the value of its Turkish joint venture.
Net interest costs increased by £5.3m to £103.8m, as a result of the capitalised interest on the payment-in-kind debt, which increased by £7.3m year on year. This was offset by scheduled debt repayments of £26m.
Sales fell 2 per cent to £1.5bn year on year, while UK like-for- like sales fell by 5.7 per cent.
However, Mr McGeorge said the performance had improved in the second half of the year, with ebitda rising from £71m to £78m.
“When I took over ebitda was falling off a cliff. The key thing is during the year we caught the ball and we successfully managed to grow our ebitda in the second half … in what was some very challenging retail conditions,” he said.
New Look said it had agreed amendments to its borrowings and extensions of all maturities on its senior debt to April 2015.
The company said the deal also earmarked £25m initially, and subject to meeting certain tests, to buy back the payment-in-kind debt at a market price.
Mr McGeorge said trading conditions remained tough. “How many times have you ever seen the high street on sale in mid-June? There are no green shoots at the moment,” he said.
He added that last week, two of New Look’s best performing departments were coats and knitwear in the new autumn colours.
New Look also confirmed that it planned to cut its store estate by 50-100 shops over the next three-to-five years.