UK fashion firm New Look exits China

Beleaguered British fashion brand New Look has announced it will close all 120 of its stores in China as well as the company's head office in Shanghai due to poor trade performance.

The high street clothing retailer said that, despite significant investment in China in recent years, the company has not achieved sufficient sales or profitability in the country.

"Having reviewed the trading performance of our business in China and the substantial investment required to continue operations in the market, we have made the difficult decision to exit our stores in China," said New Look Executive Chairman Alistair McGeorge.

"Our priority will be to support all affected staff during this time. As our turnaround plans continue, we remain focused on ensuring that New Look is well positioned to drive strong business performance and profitable growth," he added.

New Look operates on the "fast-fashion" model, releasing new designs in-store several times a month. The company opened its first store in China in 2014 and set up more than 100 more in the two years that followed. It owns and runs the shops directly, rather than through a franchise agreement.

In 2016, the company announced plans to reach a total of 500 stores in China, on par with rivals Uniqlo, H&M and Inditex, which owns Zara.

But global sales over the last 18 months have plummeted, and the company made a loss of 74.3 million pounds ($97.2 million) for the year ending March 24, compared to a 97.6-million-pound profit the year before. Overseas operations accounted for 37 million pounds of the company's losses.

In March, the company announced it had entered a form of insolvency known as a company voluntary agreement, or CVA, and closed 60 out of 593 stores in the UK. The firm also said it would review its pricing strategy, with 80 percent of its items now costing less than 20 pounds. In June, New Look confirmed it had cancelled its ambitious expansion plans for China.

Several high-profile Western brands have struggled to crack the market in China, where consumer preferences differ and bricks-and-mortar sales are dwarfed by online purchases.

Some foreign fashion brands have fielded criticism for failing to target Chinese young people with a clear strategy, and for not taking into consideration sizes for Asian body types.

In late 2016, British high street fixture Marks and Spencer announced plans to shut all 10 of its stores in the Chinese mainland as the retailer suffered heavy losses in its international business.

British retail chain House of Fraser opened its first store in China in 2016 and announced plans for 50 more, before financial difficulty saw further expansion stall.

And British online retail group Asos also pulled out of China in 2016 after it failed to compete with large, native e-commerce retailers.