Bonmarché is pinning its hopes on the key Black Friday through to Christmas trading period as the UK value women’s wear retailer maintained its full-year guidance despite a drop in profit and flat sales in its first-half.
In its interim trading update for the 26 weeks to 29 September, the retailer said underlying profit before tax declined 21.4% to GBP3.3m (US$4.2m) from GBP4.2m last year. Gross margin fell by 60 basis points to 57.2% from 57.8% in the year-ago period as better buying and stock management failed to offset “significant” adverse foreign exchange movements.
Total sales were relatively flat at GBP97.9m, while combined like-for-like sales declined by 1%. Online sales, meanwhile, surged by 28.9% and now account for 12% of total sales, while store-only like-for-like sales declined by 4%.
Bonmarché said online sales growth was fairly consistent during the first two quarters but noted store sales were “significantly worse” during the second quarter.
Growing online sales has been a priority for some time, said the retailer, which announced earlier this year it had failed to achieve its targets for the first half of the year as challenging market conditions affected its bricks and mortar stores.
“The contrast in the growth rate of demand between stores and online continues to increase, and to reflect this, we have adapted our plans with the aim of further increasing online growth,” it said.
In addition, Bonmarché said the prolonged period of warm weather in the second quarter led to stock shortages of popular summer lines and knocked sales of new seasonally appropriate transitional stock as the mild weather continued into September.
“Whilst store trading has been impacted by the general weaker consumer sentiment and footfall seen across the market, we have continued to improve our proposition, particularly our digital capabilities and with a broader, modernised product offer, which is reflected in our strong online performance,” said CEO Helen Connolly. “We remain focused on exploiting the opportunity afforded by the increasing demand for online shopping, and are encouraged by customers’ responses to new ranges such as denim, leisurewear and resortwear.
Connolly added that providing sales during the key Black Friday through to Christmas trading period meet expectations, the board maintains it continues to expect underlying profit before tax for the full year to total GBP5.5m.
Kate Ormrod, lead analyst at GlobalData, notes Bonmarché’s performance “unravelled” in the second quarter, echoing its loss of momentum in the year-ago period after a decent first-half.
She added, while decent online trading shows the retailer’s product appeals and that prioritisation of the channel in terms of investment has been the right move, it is clearly playing to a much smaller customer base online and needs to quicken the transition of store shoppers to online customers.
“A focus on in-store ordering will aid this migration as shoppers gain more confidence and trust in Bonmarché’s online proposition,” she said.