This page is quite old hence its rather spartan appearance.
Why not check out our Latest Stories page for our newest articles or search our site for anything.
MARKET COMMENT
By
Carburton Street, London -- The recent history of New Look (LSE: NEW) is a great case study in how to invest in fashion retailers. The inherent volatility of the company's trading doesn't leave much predictability for long-term investors. But for those in search of shorter term value or recovery plays, the fashion sector is a natural hunting ground. Back in March this year, New Look admitted to weak trading and reported like-for-like sales declining 2%. From a January high of 80p, the shares promptly plunged to 50p. However, today's interim numbers showed like-for-like sales growth currently running 7.4% higher. With the shares now standing at 129p, such are the ups and downs experienced by a fashion retailer and its shareholders. Certainly when New Look shares touched 50p, it's fair to say the stock market was pricing in every conceivable disaster. At the low point, the shares stood on a historical price to earnings (P/E) ratio of 3 and offered a dividend yield of 12%. Investors smart enough to realise that New Look had, like all fashion retailers do from to time to time, temporarily lost their clothing style cashed in big time. Although today's results may inspire some profit upgrades, at 129p, New Look shares stand on a forward P/E of 9.7 and offer a dividend yield of 5.2%. While the valuation may ordinarily look cheap, such ratings are pretty much par for the course for New Look and its rivals. There may be some upside left in the shares, but the danger for existing investors is the company fully recovering to become a trendy retailer once again. That, more than anything else, should herald shareholders' exit.