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Bonmarché warns on profits after leftover stock only cleared through ‘heavy’ sale discounting

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onmarché warns on profits after leftover stock only cleared through ‘heavy’ sale discounting

Bonmarché today warned that pre-tax losses may reach between £5m and £6m in its current financial year after it had discounted “heavily” in order to clear stocks during its January and February sales.

 

The women’s value fashion retailer, ranked Top100 in IRUKTop500 research, said the levels of discounting required to clear autumn and winter stocks had led it to widen its forecasts for pre-tax losses from up to £4m, to up to £6m.

 

In its winter sales, the multichannel retailer had hoped to clear stock that remained following slow third quarter sales. Today it said that the sales were successful, and that levels of stock remaining from the autumn and winter were now 40% lower than at the same time last year. However, it said, “it was necessary to discount heavily in order to achieve this.”

 

But business has not yet picked up, said Bonmarché, as consumer demand for ‘transitional’ ranges between winter and spring appeared to have been satisfied during the sale period. Trading since the beginning of March had been “significantly weaker”, Bonmarché said today, and that has reversed sales gains made in previous months. If sales continue to follow this trend, underlying losses could come in still higher. “Accordingly, we now estimate that the underlying PBT (profits before tax) loss will be between £5m and £6m,” said the retailer in today’s trading update.

 

Sales of spring clothing did pick up as temperatures climbed unseasonably in late February, but has not yet made up for lost earlier sales.

 

Bonmarché looked to reassure investors by saying that its expectations for the 2020 full year were unchanged, and that bank facilities were in place to give it access to enough cash even at the lowest end of its profits forecast. “Other than this short term borrowing requirement at the year end, the group expects to continue to operate with a positive net cash balance during FY 2020."

 

Image: screenshot of Bonmarché website, InternetRetailing Media

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