Shares in Bonmarché down more than 18% down as it warns on profits
Shares in value fashion retailer Bonmarché closed 18.45% down at 84p this evening following an earlier trading update in which it revealed that store sales had disappointed in Q2.
The group reported that it had enjoyed strong online and store sales during Q1 and that while online continued to perform strongly in Q2, it store sales "have not maintained the momentum gained during Q1, and are below expectations".
As a result of weakened store sales, which it attributed to the continued warm weather delaying demand for autumn stock and an underlying weakened consumer demand across the high street, the business has revised down its profits forecast for the year. The underlying profit before taxation for the Group for FY19 is now expected to be approximately £5.5m, compared to FY18's £8m.
It is also revising down its store sales for the second half as it expects the challenging high street conditions to continue. However, the group stressed that it remained in good financial health, had no net debt and was supported by a committed, undrawn, revolving credit facility of £10m. It expected that its cash position at the end of the year would be around £4m.
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 focussed on exploiting the opportunity afforded by the increasing demand for online shopping, whilst modernising the store offer and customer experience.
"Whilst it is disappointing that FY19's result is expected to be lower than originally planned, despite the challenging market, the health of the business remains strong: excluding the impact of the FX headwind, this year's underlying PBT expectation would be in line with the £8m achieved in FY18.
"The Board remains confident in the strategy set out in our FY18 results, and in the Company's long-term prospects."
Bonmarché was founded in 1982 and its one of the UK's largest value fashion retailers for women with 300 stores across the UK.