• FY pre-tax earnings drop to GBP5.8m (US$7.4m)
  • Pre-tax profit margin narrows to 3.3%
  • Total sales drop 0.5% to GBP190.1m
Bonmarché said fiscal year 2017 was a challenging year with the apparel market in decline

Bonmarché said fiscal year 2017 was a challenging year with the apparel market in decline

Bonmarché Holdings has outlined a new plan it hopes will help grow the business after the UK value women's wear retailer posted a 40% slump in full-year earnings and conceded efforts to modernise its business are not working.

In a trading update for the year ended 1 April, the retailer revealed pre-tax profit of GBP5.8m (US$7.4m) from GBP9.6m a year earlier. In line with revised expectations, pre-tax profit amounted to GBP6.3m from GBP10.6m. Underlying pre-tax profit margin narrowed to 3.3% from 5.6%.

Total sales for the 53 week period dropped 0.5% to GBP190.1m, while like-for-like sales were down 4.3%. Online sales grew 2.2% to GBP16.1m.

Bonmarché said fiscal 2017 was a challenging year with the apparel market in decline and demand affected by consumers' response to factors such as inflation, the referendum on Brexit, and unseasonal weather patterns.

The retailer said it has not achieved its objective to grow by gaining market share, and has consequently put in place "robust and credible" plans to lead it to growth.

These plans involve developing and modernising product, guided by a single, clear customer profile, unlocking the true potential of its 'Bonus Club' loyalty scheme, further driving online performance, modernising the store experience, investing in new systems and processes, and establishing a clearer vision and mission.

"I am confident that with our current focus on modernising and improving the offering for our customers, we remain well placed to serve the 50-plus women's value clothing market," says chief executive, Helen Connolly.

"A combination of internal and external factors over the past year prevented us from improving at the rate we had aimed for. However, we believe that the business is now well-positioned, with a compelling proposition and robust plan.

"As outlined previously, it is clear the direction of travel is broadly right, albeit the effectiveness of execution needs to improve. Our update today provides further detail on the areas where we see the greatest opportunities and how we are already beginning to address these."

Looking ahead, Bonmarché warned of continued challenging market conditions but said it is confident in its strategy and remains focused on executing it successfully and meeting its objective of growing profitable sales by gaining market share.

Kate Ormrod, lead retail analyst at GlobalData, says plans to modernise stores, systems and product ranges are much needed, especially the latter given the perception of JD Williams as a more youthful brand for 65+ shoppers.

"While this investment is late in the day, it will boost Bonmarché's chances of weathering the challenges in the year ahead. Showcasing relevance will be vital to build trust and cement loyalty, ensuring it can not only acquire new customers but hold on to existing ones."