WRITE-DOWN
Brait decides New Look is worth zero
Brait shares rallied more than 3% at one stage on Wednesday on its decision to value 2015’s £780m acquisition of UK fashion retailer New Look at the princely sum of nothing. Vele Asset Managers portfolio manager Imraan Jeeva said “most market participants were expecting a write-down” to nothing, “so yesterday’s news was not a surprise”. But the decision, while expected, is also an astonishing come-down from the 2016 financial year when New Look had a carrying value of just under R35bn. Brait’s plan is to keep New Look valued at nothing “until such time as its turnaround strategy has taken shape”, it said in a trading update on Tuesday. Lentus Asset Management’s Nic Norman-Smith said “the bigger question is whether [New Look’s] value is zero or negative. In other words, are Brait going to have to commit more capital to it, or will they write the entire thing off for the long term?” Jeeva said the main issue for the market was “how ring-fenced this New Look disaster will be”. “To sink...
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