As per its announcement of 13 December 2018, sales during the third quarter of the financial year were below Bonmarche’s initial expectations. Its priority during the “sale” period covering January and February 2019 was to clear the residual autumn/winter stock. The sale proved successful, with autumn/winter season stock levels 40 per cent lower than at this time last year, although it was necessary to discount heavily in order to achieve this.
Sales since Christmas had been slightly above the level required to meet the revised forecast range, and despite the additional discounting, our expectation was that the underlying PBT for the year would be within the lower end of the breakeven to £4.0m loss range of underlying PBT outcomes set out in December’s announcement. However, trading since the beginning of March has been significantly weaker, reversing sales gains made in the previous months. In light of this, the retailer now believes there is a likelihood of sales levels for the remainder of the month continuing to follow this trend, which would make the underlying PBT loss for the year greater than £4.0m. Accordingly, it now estimates that the underlying PBT loss will be between £5.0m and £6.0m.
Bonmarche believes that the recent downturn in trading is a consequence of the demand for transitional ranges, between winter and spring, having been satisfied during January and February. Although sales of spring season stock benefited from the spell of warm weather in late February, this is not yet a large enough part of the sales mix to compensate for the lower demand for transitional stock. Nevertheless, on the basis of this positive early reaction to the spring product, expectation for FY20 remains unchanged.
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