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‘Challenging’ UK economy hits online retailers from Thorntons to Burberry; Asos appoints Kate Bostock

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UK multichannel retailers showed the impact of the challenging domestic economy on their operations this week. Chocolate maker and retailer Thorntons reported a fall in sales, while upmarket fashion company Burberry said its UK sales had slowed.

In its first quarter trading update, Thorntons showed falling retail sales both online and offline. In the 14 weeks to October 6, total sales fell by 1%, compared to the same time last year, to £46m following the closure of 36 of its owned stores in the previous financial year. Sales at the online division, Thorntons Direct, fell by 8.5% – or £0.1m – to £1.1m, while own store sales were down by 7%. Franchise sales also dipped, falling by 23.8% to £2m after a major franchisee went into administration, taking total retail sales down by 8.6%. Like-for-like retail sales grew, however, by 24.8%, when the effect of closed stores was taken into account.

Stronger growth came from the company’s commercial arm, where sales grew by 9.8%, helping the company to report a fall in total revenues of 1% to £46m.

Jonathan Hart, chief executive of Thorntons, said the company would be cautious in the face of a weak economy and consumer confidence.

But, he said: “We continue to have confidence in our strategy to rebalance our business, revitalise our brand and restore profitability and are making good progress in its implemention.

“In our retail business our plans are stronger than last year, with innovative new products and dynamic promotions, and in the commercial channel we remain encouraged by our strong order book.

“We continue to focus on improving profitability and are pleased that the margin improvements seen earlier in 2012 are continuing to flow through.”

Meanwhile, Burberry, updating the market on its first-half trading, said its sales had slowed both in the UK and China in the second quarter to September 30. But sales were “robust” in Hong Kong, Germany and France. This meant that the company reported revenue up by 8% in the first half, at £883m, with a 10% rise in retail sales, which includes online, to £577m.

Chief executive Angela Ahrendts said: “In a more challenging external environment, footfall declined but brand momentum remained strong, particularly with our higher spending luxury consumer.

“Our highly experienced team remains very focused on the consistent execution of our key strategies, engaging consumers through innovative retail and digital marketing initiatives as we enter the most important quarter of the year. We continue to invest for long term growth in flagship and emerging markets, while tightly controlling discretionary spend.”

Elsewhere, online fashion retailer Asos reported it had hired Kate Bostock as its new executive director, product and trading. Bostock, previously of general merchandise director at Marks & Spencer, replaces product director Robert Bready, who has stepped down after seven years at Asos. In her new role she heads a product and trading team of more than 350 people.

Asos chief executive Nick Robertson thanked Bready for his contribution. He continued: “We are fortunate to have Kate bring us her wealth of experience from some of the biggest names in retailing as we strengthen our retail disciplines and put in place the structures needed to manage the next phase of our growth.”

Kate Bostock said: “ASOS is a phenomenon and I’m in awe of the story. With its unique mix of own label and fashion forward brands delivered online and increasingly through mobile, the potential for ASOS globally is huge. I’m very excited to be joining at such a time of immense opportunity”.

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