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The board of embattled womenswear retailer Bonmarché has reversed its opposition to Edinburgh Woollen Mill owner Philip Day’s £5.7m offer for the company and has asked shareholders to accept the offer.
In an update to shareholders the board explained its change of stance citing “poor” trading during the first quarter of the financial year. It attributed this to the “continued weakness in the underlying clothing market, and a lack of seasonal weather to counteract it”.
Bonmarché said due to the clothing market the achievement of a PBT result which is in line with the board’s expectations “is possible”, but added there is a “significant degree of uncertainty attached to this, and risks are more heavily weighted towards the downside”.
In the update Bonmarché said: “Whilst the board’s view remains that the offer does not adequately reflect the potential longer term value of the business, the increase in uncertainty that has developed reflecting the trading and financial position of the business during the first quarter of the financial year makes the certainty represented by the offer potentially more attractive in the short term.
“As a result, the board of Bonmarché, which has been so advised by Investec as to the financial terms of the offer, is now of the view that the terms of the offer are fair and reasonable. The board therefore recommends that shareholders accept the offer, as they intend to do so in respect of their own beneficial holdings.”
It added it believes that once the near term has been weathered, “the medium and long term prospects for the Bonmarché business are good”.
The company currently operates 312 shops around the UK and employs around 1,900 people.
