Bonmarché has reported online sales up by more than a quarter in the first half of its financial year, but a fall in store sales.
The value women’s clothing retailer, a Top150 trader in IRUK Top500 research, today reported says its overall revenue stayed broadly flat over the first half of this year, compared to the same time last year, at £97.9m (+0.1%). But like-for-like (LFL) sales, which strip out the effect of store openings and closures, were down by 1% in the six months to September 29. Within that, online sales grew by 28.9% to account for 12% of total sales. A year earlier they had accounted for 9%. But while online sales grew, store sales were down (-4%), with the trend worsening (-7.7%) in the second quarter of the year.
Half-year pre-tax profits came in at £2.3m, down by 45% from £4.2m a year earlier. In the full year, the retailer said it expects pre-tax profits to come in at £5.5m, down from £8m in the previous year.
Bonmarché said online sales grew as the retailer offered its shoppers a wider range, more choice in sizes and as customers used new in-store systems to access a growing online-only range and place online orders from the store. The retailer offers a wider choice of sizes and leg lengths online than it can in store and has also trialled selling selected third-party brands.
The retailer is now looking to increase the rate of online growth, and said online costs would increase as sales did. Investment in online marketing had brought more traffic to the site. Meanwhile, more shoppers visited using their mobile phones. “Conversion rates on mobiles are lower than on tablets or traditional laptop/desktop devices and we have focused on improving the mobile experience to maintain overall conversion rates despite the increasing mix of mobile transactions,” said Bonmarché in today’s figures.
Bonmarché has been focusing on its Bonus Club loyalty scheme and in the current year has linked the online and store elements of the scheme. It said that while the average age of new members had increased over recent years, younger online members were now joining. In total, 1.9m members have shopped with it within the last 12 months – that’s up by 5% from 1.8m in the last year, with the increase led by online and multichannel customers.
Tackling store rents
Although Bonmarché stores “experienced challenges”, almost all remained profitable: the retailer said said fewer than 10 were expected to make a loss. Meanwhile, short-term leases meant the estate was more flexible. By the end of the half-year, Bonmarché traded from 321 stores including 274 standalone stores, and 30 concessions within garden centres. One new store opened in Aberdeen during the half-year, while five stores closed at the end of their leases, either because the retailer was not satisfied with the rent reduction the landlord had offered, or because the locations were not expected to perform well in the future.
At the moment the average remaining lease on Bonmarché stores is of 3.6 years, and leases representing two-thirds of its rents expire before March 2022. Bonmarché said that falling store sales and growing online sales may in time mean changes to its store estate. That said, if it based store decisions on profitability, it said, it would continue with a broadly unchanged store estate. “In an attempt to gain a better understanding of the increasingly complex relationship between store sales and online sales, with the help of a third party consultant, we are developing a model which should provide a more sophisticated basis for making decisions about the future configuration of the store portfolio,” said Bonmarché in today’s statement.
Chief executive Helen Connolly said: “While 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. We remain focussed 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 resort wear.”
She said Bonmarché’s business fundamentals remained strong and that the board was confident in its strategy.
Commenting, Kate Ormrod, lead analyst at data and analytics company Global Data, said Bonmarché’s performance had unravelled in the second quarter, when store LFL sales fell by 7.7%. “Blame has been laid on weak footfall for crushing store like-for-likes, though it has not achieved store LFL growth since Q1 FY2017/18. While this is not uncommon in the fashion sector, with shoppers muting spending for the past two years, unlike players such as Next, Bonmarché does not have the luxury of a high online mix, with the channel accounting for just 12% of sales.
“However decent online trading shows that the retailer’s product appeals and that prioritisation of the channel in terms of investment has been the right move; but clearly the retailer is playing to a much smaller customer base online and needs to quicken the transition of store shoppers to online customers. A focus on instore ordering will aid this migration as shoppers gain more confidence and trust in Bonmarché’s online proposition.”