Womenswear retailer Bonmarche Holdings PLC (LON:BON) has issued its third profit warning in six months after poor trading in March.
The company now expects an underlying pre-tax loss of between £5mln to £6mln, compared to a previous forecast for breakeven to a pre-tax loss of £4mln.
"This rather reflects the problems brands face as the spiral of discounting starts to sap consumer confidence – shoppers now expect to see 40-50% off everything and are less satisfied with smaller discounts," said Neil Wilson, chief market analyst at Markets.com.
READ: Bonmarche says trading conditions worse than financial crisis as it issues fresh profit warning
Bonmarche said sales in the first two months of the year were slightly above the level required to meet its forecast range but trading since the start of March has been “significantly weaker” and it expects this trend to continue to the end of the month.
“We believe 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,” Bonmarche said.
“Although sales of spring season stock benefitted 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, our expectation for the fiscal year 2020 remains unchanged.”
Bonmarche said its cash balance reaches its lowest point in the annual cycle at the end of March but its bank facility is expected to be sufficient to meet liquidity requirements, even at the lowest end of the full-year guidance range. The group added that it expects to operate with a positive net cash balance in 2020.
Shares fell 16.2% to 31p in morning trading.