Bonmarché has warned that it’s likely to record a loss of up to £4m at the end of the current financial year, if “unprecedented” weak trading conditions, driven by Brexit uncertainty, continue.
The value women’s fashion retailer had forecast, in interim results published last month, that it would see underlying pre-tax profits hit £5.5m in its 2019 full-year – as long as sales met expectations from Black Friday onwards, following a slow start to autumn sales.
But while the retailer had assumed that shoppers were delaying spending in the early autumn in order to save their money for Black Friday discounting, it instead found that sales during Black Friday week were “extremely poor”, especially in store. “Consumer behaviour is not following last year’s pattern , nor the pattern of any year we have experienced previously,” said the retailer, ranked, in a trading update today. “Further, sales have not recovered since Black Friday, despite the application of extensive discounts. Consequently, we have concluded that sales will not recover to normal levels in the short term.”
This, it said, was likely to be down to the uncertainty around Brexit, and that demand was unlikely to strengthen until that uncertainty was over.
As a result it has moved its annual forecast to suggest underlying pre-tax profits will fall somewhere between breaking even and, at worst, a £4m loss. The mid-point of the range assumes a 12% fall in store like-for-like sales in the third quarter, and a 1% fall in the final quarter, a year on from a fall of 11%.
Chief executive Helen Connolly said: “The current trading conditions are unprecedented in our experience and are significantly worse even than during the recession of 2008/09. I hope that in the fullness of time, our cut to the forecast may prove to have been overdone but in the current market, this seems the appropriate stance to adopt.
“I believe that Bonmarché is well-prepared to weather the storm and that we can look forward to some recovery in FT20. Accordingly the board remains confident in the strategy, and in the company’s long-term prospects.”
Bonmarché is ranked Top150 in IRUK Top500 research.