LONDON, United Kingdom — New Look Retail Group Ltd., the struggling UK retailer part-owned by South African billionaire Christo Wiese, has agreed to assign the lease on its planned new London headquarters to Google parent Alphabet Inc., according to two people with knowledge of the agreement.
The value fashion brand had planned to occupy the building in the King’s Cross district this year and will now keep workers at their existing office in the West End, New Look told staff in a memo seen by Bloomberg News, without naming Alphabet.
Brait SE — an investment vehicle of Wiese, who’s also the biggest shareholder in troubled Steinhoff International Holdings NV — wrote off the value of its £780 million ($1 billion) investment in New Look in November, less than just two years after buying the firm. New Look announced the plan to move about 800 staff to King’s Cross in March 2016 after signing a lease for about 123,000 square feet (11,500 square meters) of space there.
The decision to transfer the lease followed an unsolicited offer from an unnamed third party, a New Look spokeswoman said by email. A Google spokesman in London was unable to immediately comment.
Brait has been trying to stabilise the retailer’s performance after the departure of chief executive Anders Kristiansen in September and an 8.6 percent decline in comparable sales in the first half. Unsecured bonds for New Look, which operates about 600 stores in the UK, trade at a record low of 14 pence on the pound, according to data compiled by Bloomberg.
The UK’s high street retailers have been suffering as rising food prices crimped shoppers’ spending power over the holiday season. On a comparable basis, the country’s non-food sales fell 4.4 percent in the three months through December, according to the British Retail Consortium. The tough trading conditions have forced profit warnings from Debenhams Plc and Mothercare Plc this month, while House of Fraser is seeking reductions on its store rents.
Google has signed leases for several buildings at the King’s Cross Central development and confirmed plans to build its new UK headquarters there last year.
By Jack Sidders and Sam Chambers, with assistance from Nate Lanxon; editor: Neil Callanan.