Proactive Investors - Run By Investors For Investors

Bonmarche slumps as warm weather and weak demand lead to profit warning

Bonmarche boss Helen Connolly said "these are undoubtedly challenging times in the retail industry"
Bonmarche
Bonmarche has been focused on improving its online offering

Bonmarche Holdings PLC (LON:BON) shares fell more than 17% on Thursday after the womenswear chain warned profits would miss expectations as the warm weather hurt demand for its autumn ranges.

The company now expects full-year profits of £5.5mln, down from £8.0mln last year.

READ: Bonmarche a surprise winner as heatwave boosts sales

“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,” the company said in a trading statement.

In the second quarter, online sales continued to grow strongly but sales at stores have not kept up the momentum gained in the first quarter.

For the rest of the year, the company expects online sales to rise "at least at the rate seen recently" through further improvements to the online shopping experience and the extension of online exclusive ranges.

But Bonmarche said given the uncertainty on high street footfall, it believed it was “prudent” to reduce the store sales forecast for the second half of the year.

“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,” said chief executive Helen Connolly.

Health of the business remains strong​

“We remain focused on exploiting the opportunity afforded by the increasing demand for online shopping, whilst modernising the store offer and customer experience.”

She added: "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 pre-tax profit expectation would be in line with the £8.0mln achieved in FY18.”

Bricks and mortar retailers have been struggling as consumers increasingly shun the high street and shop online. Sports Direct International PLC (LON:SPD) took over House of Fraser after the department store’s financial difficulties while Debenhams PLC (LON:DEB) has issued three profit warnings this year.

Around noon, shares in Bonmarche were trading hands at 84.9p. 

View full BON profile View Profile

Bonmarché Holdings plc Timeline

Related Articles

H&T
May 21 2019
H&T investing in digital offeringProfits gain in 2018Outlook upbeat as strategy pays off
medical imaging graphic
June 13 2019
Here we take a closer look at the imaging and diagnostics firm IQ-AI
drainpipes
May 23 2019
Company is looking for more acquisitions after integration of Metro Rod

© Proactive Investors 2019

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use