Glimmers of hope


Glimmers of hope

Ready for some good news? Multichannel marketers including Next, N Brown and ASOS.com recently released financial statements, and the figures weren’t dire. Even companies that experienced declines in sales or profits were taking a cautiously optimistic view toward the rest of the year.

Amongst the major winners was N Brown, whose stable of fashion and home goods catalogues includes Simply Be and JD Williams. In the 53 weeks to 1st March 2008, N Brown posted a like-for-like sales rise of 12.5 per cent; operating profit from continuing operations climbed 20.3 per cent, to £91.8 million. What’s more, trading for the eight weeks to 26th April was up 12.1 per cent on the same period last year, and the company is confident it will “continue to outperform”. It recently launched a ladieswear range with fashion expert and TV personality Caryn Franklin and is building on the success of its home and leisure Christmas range by rolling out a year-round gift offering, TheBrilliantGiftShop.co.uk. In the past year home and leisure sales have grown by 14 per cent and now account for 27 per cent of total sales.

Another winner was ASOS.com. In its pre-close update, it announced sales for the 12 months to 31st March of £81 million, up 90 per cent on the previous year and profit before tax was expected to be ahead of analysts’ forecasts. The fashion merchant also started 2008 strongly, with sales for the four weeks to 27th April up 80 per cent year on year.

Granted, not all companies could boast such sterling growth. Mosaic Fashions, the parent company of Coast, Principles, Shoe Studio and Warehouse, announced a loss in the year to 26th January of £30.2 million, compared with a profit of £17.2 million the previous year.

But whilst the tough retail marketplace was a factor, Mosaic said internal changes (including the January divestiture of the Whistles brand) had shifted focus away from performance. Now, said chief executive Derek Lovelock, he is confident that Mosaic is in “a good position to weather the downturn and emerge as an even stronger international, multibrand, multichannel womenswear retailer”.

Homewares and apparel retailer Next is also relying on “weathering” the downturn. Warmer temperatures toward the end of April helped lift sales, though like-for-like retail performance from 27th January to 7th May was still down 7.8 per cent. Next had budgeted for a repeat of last summer’s cold and wet weather, so it expects trading to improve “significantly as a consequence”.

At electricals merchant DSG International, the parent company of Dixons and PC World, group sales rose 6 per cent in the 25 weeks to 5th April; like-for-like sales were down 1 per cent on last year. Customers have become “increasingly promotion- and deal-driven,” chief executive John Browett said in a presentation to the City. “It is important that we increase our focus on delivering the value, choice and service that our customers demand, particularly in the prevailing difficult economic climate”.

Claire Locke, co-founder and nonexecutive director of fashion catalogue Artigiano, echoed that sentiment when she told Catalogue/e-business that even a business that thinks it is “recession-proof” shouldn’t be complacent: “Businesses should focus on giving an A1 service to customers and being better and sharper overall.”

Industry experts, for the most part, agree that a business that can differentiate itself can succeed even during tough economic times. Achieving such differentiation, however, means a continued investment in marketing. Also vital, said Dr John Rudd of the Aston Business School, is the ability of a business to respond quickly to new challenges.

“In times of uncertainty, successful organisations will be able to recognise and adapt to changing conditions,” Rudd said. “It is the job of marketing to make it their company’s product or service that customers select. So for successful marketing departments, any economic uncertainty should mean more work, not less, which should reflect in holding or increasing budgets, certainly not cutting them.”

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