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Alexon Group suffers from challenging trading conditions

Published: 21:38 07 Jul 2011 AEST

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Clothing retailer Alexon Group (LON:AXN) said that despite good progress made by it between January and July this year, it expects its performance during the current year to be affected by challenging trading conditions within the UK retail industry.

Meanwhile, the firm said that it is “actively exploring” options for a more appropriate capital structure to firstly reduce the business’s debt and also enable it to invest in the next stages of its turnaround plan.

The company – whose share price was down 15 percent at 8.9 pence by midday today – said that group like-for-like sales in the 22 weeks to 2 July were up 0.9 percent. This period incorporated a difficult start to the high summer sale, reflecting lower footfall in June, but Alexon said it was “a creditable performance given the current market environment”.

In terms of relative brand performance, Kaliko, Alexon and Eastex outperformed during the period as their spring/summer collections were “well received” by both the fashion industry and consumers.

Strong trading on these brands helped to offset negatives on Dash and Minuet, said Alexon. Dash continued to be affected by cotton raw material inflation, which is now easing slightly. Ann Harvey remained broadly flat but with some very encouraging signs from its new casual development.

Performance among Alexon’s department store concessions was polarised, with the best performances being delivered by those store groups with established Web platforms and active marketing function.

Alexon added that its initial intake of its Autumn 2011 product is working well across all brands, with positive like-for-like sales and faster stock turn than last year.

Meanwhile, its multichannel strategy continues to progress “exceptionally well”, with total online sales of the period up 115 percent with strong trading through its partner concession Web sites as well as its own platforms.

The firm’s turnaround strategy is progressing, with a focus on restructuring Alexon’s store portfolio as well as continuing to develop its brand propositions and accelerating its e-commerce business. However, the combination of market conditions and reduction in revenues as a result of December’s trading losses has affected its ability to invest in this turnaround strategy.

 

 

 

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