High street woes continue as listed retailer issues stark profit warning

Womenswear retailer Bonmarché has said it expects its full year profits to be reduced by £2.5m due a the downturn in store trading.

The Wakefield-based retailer said that despite its trading during Q1 being significantly better than in the final quarter of FY18, it was dropping its full year pre-tax profits expectations from £8m to £5.5m. Its online sales have improved but stores have been severely impacted.

Helen Connolly, chief executive, said: “These are undoubtedly challenging times in the retail industry and, in common with many other businesses, Bonmarché’s store trading has been impacted by weaker consumer sentiment and footfall. We have continued to improve our proposition, particularly our digital capabilities, reflected in the strong online sales. We remain focused on exploiting the opportunity afforded by the increasing demand for online shopping, whilst modernising the store offer and customer experience.”

Bonmarche added: “In light of the recent downturn in store trading, the Board has reviewed the Company’s forecasts for the remainder of FY19. Online sales are expected to grow at least at the rate seen recently, through further improvements to the online shopping experience, and the extension of online exclusive ranges.

“However, due to the uncertainty regarding high street footfall, we believe it prudent to reduce the store sales forecast for the second half of the year. Planned Group discretionary operating expenditure for the balance of the year has been reviewed and reduced where appropriate, but a measured view has been taken, so as not to jeopardise the ability of the Company to implement improvements designed to deliver growth in future years. As a result of these changes to the store forecast, the underlying profit before taxation for the Group for FY19 is now expected to be approximately £5.5m (FY18: £8.0m).”

Connolly said that while it was disappointing that FY19’s result is expected to be lower than originally planned, despite the challenging market, the health of the business remained strong. “The Board remains confident in the strategy set out in our FY18 results, and in the Company’s long-term prospects,” she added.

The firm said that during the second quarter of the financial year, online sales continued to grow strongly, in line with expectations, but sales in the stores have not maintained the momentum gained during Q1, and are below expectations.

The retailer added: “The continuation of warm weather for an extended period may have delayed demand for early autumn stock, but we believe that the more dominant factor is that underlying consumer demand for the UK high street is weaker which is impacting footfall.”