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Shares in fashion retailer Bonmarché halved this morning (13 December) from 81 pence to 47 pence after announcing it expects losses of £4m for the current financial year.
The group blamed the “uncertainty surrounding Brexit” as a significant factor affecting demand, and expects like-for-like sales for Q3 to drop by 12%, and approximately 1% for Q4.
The company, which issued a profit warning in September, saw profits fall by 21% for the first half of the year, attributed to “weaker consumer sentiment” in a “challenging market”. At the time the retailer said it did not achieve the target it set for the first half of the year, but expected to meet the adjusted full-year guidance of underlying profit before tax of £5.5m.
The group said those initial forecasts assumed that demand would broadly follow the pattern experienced last year when, during the earlier part of November, customers delayed purchases in anticipation of being able to take advantage of Black Friday discounts.
However, sales during the Black Friday week (ending 24 November 2018) were “extremely poor”, particularly in the retail stores, and CEO Helen Connolly said this consumer behaviour “did not [follow] last year’s pattern, nor the pattern of any year we have experienced previously”.
She added that sales have not recovered since Black Friday, despite the application of extensive discounts, and has concluded that “sales will not recover to normal levels” in the short term, and that it is “appropriate to make a further revision to the forecast”.
Connolly said: “The current trading conditions are unprecedented in our experience and are significantly worse even than during the recession of 2008/9. I hope that in the fullness of time, our cut to the forecast may prove to have been overdone, but in the current market, this seems the appropriate stance to adopt.
“I believe that Bonmarché is well prepared to weather the storm, and that we can look forward to some recovery in FY20. Accordingly, the Board remains confident in the strategy, and in the company’s long-term prospects.”
