• H1 earnings drop to GBP1.52m (US$1.88m)
  • Gross margin up 30bps to 57.8%
  • Sales fall to GBP93.1m

UK value women's wear retailer Bonmarché Holdings says it is to focus on increasing the flexibility of its supply chain as it revealed lower earnings and sales in its first-half.

In the 26 weeks ended 24 September, net profit dropped to GBP1.52m (US$1.88m) from GBP4.04m in the year ago period. Gross margin edged up 30 basis points to 57.8%, despite higher discounting, which was offset by a higher bought-in margin percentage.

Total sales fell to GBP93.1m from GBP97m, while like-for-like sales were down 8.6% in the period. Online sales declined 1.1% in the six months, but saw an increase of 2.3% in the second quarter, which was "significantly" higher than store sales, the company said. 

The decline in sales was primarily due to too many repeats in ranges, long lead times, and a supply chain dominated by Chinese factories, which restricted the ability to react to changes in seasonal demand, the company said. 

Going forward, Bonmarché has set its focus on increase the flexibility of its supply chain. It explains: "We work with many very good suppliers, but our supply chain lacks agility. One of the consequences of this inflexibility is that it has been harder for us to react to periods of unseasonal weather or changing market trends.

"As with the other improvements we will be making to the overall proposition, a more flexible supply chain cannot eliminate the impact of a poor season, but it is another step to be taken in mitigation.

"As we evolve our supply chain, our objective will be to maximise the cash margin. To allow this, we will take a more flexible approach, as appropriate, to the components of sales volumes, selling prices, bought in margin and discounts. The optimal solution may, for example, involve a reduction in bought in margin, to the overall benefit of cash margin, through higher sales and lower discounts."