Administrators to Bonmarché are this morning continuing to trade the women’s fashion business as they look for potential buyers.
Tony Wright, Alastair Massey and Phil Pierce, partners at specialist business advisory firm FRP Advisory were appointed when the retailer, which specialises in serving the over-50s, went into administration on Friday.
Today Bonmarché’s 318 stores are open while it continues to sell online and by telephone. But 2,887 jobs, including 200 at its head office, are at risk although no redundancies have been made as yet. Bonmarché is ranked Top100 in IRUK Top500 research.
“Bonmarché has been a staple on the UK high street for nearly three decades, but the persistent challenges facing retail have taken their toll and led to the administration,” said Wright. “There is every sign that we can continue trading while we market Bonmarché for sale and believe that there will be interest to take on the business.”
FRP says the administration came after “a sustained period of challenging trading conditions and cashflow pressure, which meant the business was unable to meet its financial obligations as they were due.”
The news of administration comes months after Philip Day’s Spectre Holdings investment vehicle bought Bonmarché for £3m over the summer. Day, who also owns the Edinburgh Woollen Mill group stepped in to buy the business shortly after the retailer issued a profit warning last March.
In context
Bonmarché had appeared to be making progress when it reported its first-half results, 11 months ago. During that first half it had focused on boosting online sales and on customer loyalty. It linked the online and store elements of its Bonus Club loyalty scheme during that six months, and online sales rose by 28.9% to account for 12% of retail sales of £97.9m. But store sales had fallen by 4% at the same time and while the retailer was in the black, with pre-tax profits of £2.3m in the six months to September 29 2018, that figure was 45% down on a year earlier. At that point it expected to make full-year profits of £5.5m, down from £8m in the previous year.
Even as the retailer announced its figures last November, it was running a Black Friday sales campaign offering ‘buy one, get one half-price’ on everything. In March 2019, it said that it had discounted heavily in order to clear unsold stock in January and February sales, while trading had not picked up enough during unseasonably warm weather in the early spring. It warned that it expected full-year losses might reach between £5m and £6m.
Philip Day stepped in to buy the business in April via Spectre Holdings and last Friday it went into administration.
Spectre, reported the BBC, said: “We are disappointed with the result of our investment but our primary thought at this time is with the business’ employees,” while Bonmarché chief executive Helen Connolly is reported to have said: “We have spent a number of months examining our business model and looking for alternatives. But we have been sadly forced to conclude that under the present terms of business, our model simply does not work.”
Connolly is reported to have said that the business had considering a CVA or a refinancing but had concluded that neither would fundamentally change the core challenges facing the business.
Commenting, Richard Lim, chief executive of Retail Economics, said Bonmarché was “another example” of a retailer that wasn’t able to restructure the business fast enough to meet today’s new trading realities. He said: “The migration towards online shopping and lower levels of footfall have collided with rising operating costs which has eroded profitability. Put simply, the business model is broken.
“Apparel retailers face the brunt of these challenges. Many have too many stores, unsuitable space and can’t pivot their business models fast enough because of inflexible lease structures and years of underinvestment in online. As the administrators are called in, distressed discounting of stock will impact their competitors in the all-important run-up to Christmas.”
Image: Screenshot of Bonmarché.co.uk/InternetRetailing Media
