Second time lucky for New Look flotation?

Soho’s trendy Maya Club is a long way from a single shop in Taunton. But as the champagne flowed at New Look’s party to celebrate 40 years of the fashion retailer last night, all the talk
was likely to be on the next stage of the fast fashion retailer’s ascent.

New Look is heading the pack of private equity backed retailers considering a return to the market next year. And with a flurry of weekend stories speculating that advisers are about to be appointed, it looks like an IPO is on the cards once the company is confident that the equity markets are open for business again.

The failure of the attempts to float or sell New Look in 2007 was a bitter blow to its management and investors. It was more a question of price and timing than anything fundamentally wrong with the business, but since then management has had a relentless focus on getting the business into the right shape so that when the market comes back, they don’t fail again.

That time is now getting close and New Look is a different company to the one it was two years ago. Its stores are much bigger, it has a strong web offering and it has built up its international business. There has been a shake-up of the senior management, market share has grown and symbolically it has uprooted its head office from sleepy Weymouth to the heart of the West End.

After two years in which IPOs have been impossible, the climate for retail flotations across the world is showing signs of being more amenable, although tangible evidence in the UK remains thin on the ground. In the US, KKR-backed Dollar General has filed for an IPO (p18) while in Australia TPG-owned department store chain Myer this week announced plans for a £1bn-plus float.

That’s not to say it will be easy. As Jessops this week reminded us, the track record of private equity IPOs is mixed and institutional investors will be aware that unlike in the boom years early in the decade, the public markets are probably the only exit route. New Look, and other retailers trying to float, like Pets at Home and Poundland, will have to work hard to explain their stories.

But ultimately they should succeed because all three have good stories to tell. They’re successful businesses with strong management teams and, crucially, they all have plenty of headroom for further growth as publicly-owned businesses. Not all retailers considering joining the embryonic IPO boom can say the same, but these three should all be welcome additions to the public market.