Bonmarché shares drop 28%
Shares in womenswear retailer Bonmarché fell 28% to 91p a share in early trading after the company reported a 5.5% fall in sales over the Christmas period.
The Wakefield-based retailer reported “disappointing” store like-for-like sales growth in the run up to Christmas but saw online sales soar, which it said reflects its strategic focus in this area.
In a trading update for the 13 and 39 week periods to December 30, Bonmarché confirmed that profit expectation for the year remains unchanged.
Sales for the 13 weeks to the end of December decreased by 5.5% while store LFL sales decreased by 9.7% and online sales increased by 28.5%.
Sales for the 39 weeks to the end of December increased by 0.9%; store LFL sales decreased by 2.8% and online sales increased by 35.5%.
Anticipating the continuation of difficult market conditions during its third quarter, Bonmarché said it adjusted its stock purchasing plans, and therefore the level of discounting was reduced compared to last year, resulting in a slight improvement in the gross margin percentage.
“Meanwhile, costs have been tightly controlled, and the company’s financial position remains sound,” the company said.
Helen Connolly, chief executive of Bonmarché, said: “The clothing market became more challenging during this quarter, especially on the high street; consequently our store LFL was disappointing. We are pleased with the strong growth we achieved in online sales, reflecting our strategic focus in this area. Following the trend seen throughout this year, the 50+ women’s outer/sportswear market declined compared to last year, however Bonmarché continued to grow its share.
“There remains uncertainty as to how trading conditions will evolve as we enter our final quarter. We do not anticipate material changes in the underlying market conditions, and in this short term outlook, the weather represents the most significant uncertainty due to its effect on consumer shopping behaviour, with the risks equally weighted on the up and downsides. At the end of the third quarter, the board’s view of the likely outcome for the full year remains in line with previous expectations.
“Looking further ahead, whilst we expect the market to remain difficult, we have a number of self help initiatives in progress or planned for FY19, which are expected to deliver profitable like for like sales growth in stores, and the continuation of strong sales growth online.”
