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Bonmarche says trading conditions worse than financial crisis as it issues fresh profit warning

Bonmarche said it believes uncertainty surrounding Brexit is a "significant factor" affecting consumer demand
Shares plunged 36% in morning trading

Bonmarche Holdings PLC (LON:BON) shares strutted lower after the fashion retailer issued its second profit warning in three months, saying current trading conditions are “significantly worse” than the financial crisis.

The company said sales in the Black Friday week ended November 24 were “extremely poor”, particularly at its stores, after a weak performance throughout the year.

Trading conditions 'worse than financial crisis'

Since Black Friday, sales have not recovered despite extensive discounts.

"The current trading conditions are unprecedented in our experience and are significantly worse even than during the recession of 2008/9,” said chief executive Helen Connolly.

Bonmarche had previously said it needed sales to meet expectations during the key trading period from Black Friday through to Christmas in order to meet its forecast of underlying pre-tax profit of £5.5mln for the year.

READ: Bonmarché blames challenging retail market for lower first half profits and sales

Following a weak performance, it now expects underlying pre-tax profit in the range of breakeven to a loss of £4.0mln. The mid-point of the guidance range reflects an estimated 12% drop in third quarter like-for-like store sales and a 1% decrease in fourth quarter like-for-like sales.

The group said it intends to maintain a progressive dividend policy but will review its stance in relation to the final payout for the year when there is “greater clarity” about the full year's result and the outlook for the clothing market next year.

Brexit uncertainty hurts demand

“We believe that uncertainty surrounding Brexit is a significant factor affecting demand and, therefore, that it may not strengthen until the current period of heightened uncertainty ends,” the company said.

“As we have no visibility of when matters will be resolved, we have taken what we believe to be a cautious approach to our forecast and assumed that sales will not show any significant improvement before the end of March 2019.”

Connolly said the group remains confident in its strategy and long-term prospects. She believes the company is well prepared to weather the storm and expects to see a recovery in 2020.

Shares plunged 36% to 51.50p in morning trading. 

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