×
Published
Jan 19, 2018
Reading time
3 minutes
Share
Download
Download the article
Print
Click here to print
Text size
aA+ aA-

Bonmarché sales fall despite e-tail's strength, weather remains a challenge

Published
Jan 19, 2018

Online sales surged at British value fashion retailer Bonmarché in the 13 weeks to December 30. But that was just about the best news in the company’s trading update on Friday as the year ended on a pretty bleak note with falling store sales.


Bonmarché



And the company, which targets older female shoppers, must have been disappointed after its recovery looked to be taking hold more strongly earlier last year. But it stayed cautiously upbeat, hailing its increased market share, margin maintenance and “self-help” initiatives planned for the future.

So what did the Christmas quarter deliver? Total sales in the 13 weeks fell 5.5% year-on-year and we can’t really blame store closures as store numbers had fallen only around 1%. Comparable store sales fell a worrying 9.7%, but at least that online surge helped to counter the effects of weakness in its physical stores.

It had all looked so much more upbeat earlier in 2017 and on Friday the company highlighted the extent of the sharp downturn with year-to-date figures that looked much better. It said that in the 39 weeks to December 30, its sales rose 0.9% with those earlier, better, sales results dragged down by the latest quarter’s performance. The most recent quarter dented otherwise-respectable comparable store sales for the year-to-date too, causing them to fall 2.8% in the longer period. Again though, online sales soared with a 35.5% rise.

DECEMBER DIP

So what was the big problem at the end of last year? Was it the nightmare October scenario that affected so many other UK fashion retailers? It seems not. Bonmarché, helpfully, also provided figures for the five weeks to December 30 and they were the worst of the lot (in physical stores at least), dropping lower than even the 13 weeks. 

In fact, during fiscal December, comparable store sales dropped 10.4%, presumably as the company suffered from the same falling visitor traffic issues that hit much of UK retail last month. Total sales were down ‘only’ 6.2% though as another December factor kicked-in - an online surge. Its e-sales rose as much as 39.2% during the month, further underlining the migration of UK shoppers to the web for their Christmas shopping needs. 


Bonmarché



But despite that, the weak trading in its stores in the year’s busiest shopping month will be a major headache for the firm as it has 324 of them and they need to pay their way.

One upbeat note though was that even when taking the sales drops into account, the company’s profit expectation for the year remains unchanged and it appears to have responded quickly to the worsening conditions in its stores.

“Anticipating the continuation of difficult market conditions during our third quarter, we adjusted our stock purchasing plans, and therefore the level of discounting was reduced compared to last year, resulting in a slight improvement in the gross margin percentage,” it said. “Meanwhile, costs have been tightly controlled, and the company's financial position remains sound.”

But what does the company do next in a market where it might have been expected to be one of the Christmas winners given that it operates at the more buoyant ‘value’ end of the market?

CEO Helen Connolly seemed to suggest that online will be an even bigger focus. "The clothing market became more challenging during this quarter, especially on the high street,” she said. “Consequently our store [comp sales were] disappointing. We are pleased with the strong growth we achieved in online sales, reflecting our strategic focus in this area.”

But while the firm does face major challenges in its core market, it appears to be getting some things right. Connolly said that following the trend seen throughout this year, the 50+ women's outer/sportswear market declined compared to last year, but Bonmarché continued to grow its share.

“There remains uncertainty as to how trading conditions will evolve as we enter our final quarter,” she added. “We do not anticipate material changes in the underlying market conditions, and in this short-term outlook, the weather represents the most significant uncertainty due to its effect on consumer shopping behaviour, with the risks equally weighted on the up and downsides. “

But she also said that “looking further ahead, while we expect the market to remain difficult, we have a number of self-help initiatives in progress or planned for FY19, which are expected to deliver profitable like-for-like sales growth in stores, and the continuation of strong sales growth online.” Watch this space.

Copyright © 2022 FashionNetwork.com All rights reserved.