High street woes see profits drop for listed retailer despite online sales growth

Womenswear retailer Bonmarché has seen a drop in profits despite a surge in online sales at the half year mark.

For the 26 week period ending 29 September, the Wakefield-based retailer reported total revenues of £97.9m.

During this time store like-for-like sales decreased by 4%, whilst online sales rose by 28.9%.

Bonmarché also reported a 45.2% drop in pre-tax profit to £2.3m, compared to the £4.2m achieved at the same period last year.

Commenting on the results, the retailer said: “We did not achieve the target we set ourselves for the first half of the year, as a result of the challenging market conditions affecting the bricks and mortar stores. Growing online sales has been a priority for some time, and sales in this channel have continued to grow strongly.

“The contrast in the growth rate of demand between stores and online continues to increase, and to reflect this, we have adapted our plans with the aim of further increasing online growth.”

Only one new store opened in this 26 week period. Based on its performance during the three months since opening, the store in Aberdeen will achieve a payback on the initial investment in approximately 18 months.

Five stores were closed at the end of their leases, either because they were in locations which were not expected to perform well in the future or because the retailer were not satisfied with the rent reduction offered by the landlord.

The number of stores at the end of the year is expected to be approximately 320.

Helen Connolly, CEO of Bonmarché, said: “Whilst store trading has been impacted by the general weaker consumer sentiment and footfall seen across the market, we have continued to improve our proposition, particularly our digital capabilities and with a broader, modernised product offer, which is reflected in our strong online performance.

“We remain focussed on exploiting the opportunity afforded by the increasing demand for online shopping, and are encouraged by customers’ responses to new ranges such as denim, leisurewear and resortwear.”

She added: “Providing that sales during the key Black Friday through to Christmas trading period meet expectations, the Board maintains the guidance published in September, being that the underlying PBT for the Group for FY19 will be £5.5m.

“Despite the challenging market, the health and fundamentals of the business remain strong and the Board remains confident in the strategy and in Bonmarché’s long-term prospects. Accordingly, the Board has declared an interim dividend of 2.5p per ordinary share, in line with last year’s interim dividend. The Board’s intention at this time is that the total dividend in respect of FY19 will be maintained at 7.75 pence per share, in line with FY18.”

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