Bonmarché has warned it could swing to a full-year loss following “extremely poor” Black Friday sales and the uncertainty surrounding Brexit.
In a trading update today (13 December), the UK value women’s wear retailer also said sales have not recovered since Black Friday, despite extensive discounts – and are unlikely to recover to normal levels in the short term.
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Last month, Bonmarché noted that despite strong year-on-year growth in online sales, store like-for-like sales had remained weak, and the start to the autumn/winter season had been slow. For the group to be confident of achieving the GBP5.5m underlying profit before tax forecast for FY19, sales needed to meet expectations during the key trading period from Black Friday through to Christmas.
The forecast assumed that demand would broadly follow the pattern experienced last year when, during the earlier part of November, customers delayed purchases in anticipation of being able to take advantage of Black Friday discounts.
“Consequently, we have concluded that sales will not recover to normal levels in the short term, and that it is appropriate to make a further revision to the forecast,” Bonmarché said.
“We believe that uncertainty surrounding Brexit is a significant factor affecting demand and, therefore, that it may not strengthen until the current period of heightened uncertainty ends. As we have no visibility of when matters will be resolved, we have taken what we believe to be a cautious approach to our forecast and assumed that sales will not show any significant improvement before the end of March 2019.”
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By GlobalDataAs a result, the retailer is now expecting underlying profit before tax to be in the range of breakeven to a loss of GBP4m for the current financial year.
In addition, Bonmarché said like-for-like sales are expected to tumble by 12% in the third quarter and by 1% in the fourth, sending shares tumbling by 42.86% this morning.
“The current trading conditions are unprecedented in our experience and are significantly worse even than during the recession of 2008/9,” said CEO Helen Connolly.
