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Jul 27, 2017
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Bonmarché trading update shows turnaround is on track

Published
Jul 27, 2017

The last set of results from value fashion retailer Bonmarché may not have been that impressive but Q1 seems to have been a turnaround period for the company.


Bonmarché



In the 13 weeks to July 1, total sales rose 7.6% and store comparable sales were up 4.2%. And online? Well that powered ahead with an impressive 39% uplift.

It was good news for the firm and a complete contrast for the year to April 1 when revenue dipped from £188m to £186.1m (on a 52-week comparable basis), comp sales fell 4.7% and online sales barely moved, rising only by £0.3 million to £15.7 million. Profits also fell.

So what exactly happened this time at the company, which is one of the UK's largest women's value retailers?

Well, the trading update was short on detail but it seems the firm’s confidence when it delivered its not-so-great full-year results last month wasn’t misplaced as ket strategic shifts fed through into a much-improved performance.

On Thursday, CEO Helen Connolly said: "I am pleased with the improvement in trading and in particular the further progress in online sales. While we are in the early stages of implementing our strategy, I am encouraged by the positive response from customers to the developments in our ranges and the improvements we are making to the shopping experience.”

The better sales performance during the first quarter, achieved in a clothing market which remains challenging, “underpins our confidence in the strategy, and our expectations for the full year remain unchanged,” she added.

That strategy has been a cautious, “evolutionary, low-risk” one that the company hopes will yield steady improvements (although that online surge shows it certainly doesn’t exclude explosive growth).

Despite the undeniably challenging times in the fashion sector, importantly, it  seems that the stars are aligning in just the right way for Bonmarché. Consumers , especially in the older age group that the firm targets, are becoming ever more value-conscious and its low prices are likely to to be more appealing. Additionally, in the most recent quarter it didn’t have to face major issues like the BHS closing down sales that dented its takings last year.

But the performance improvement is also down to the active changes it has been making with the firm shifting away from its previous over-reliance on the weather-dependent casualwear that were a key part of its weaker sales in theist fiscal year. And, as signalled last month, it’s also been working hard to add more regular newness to its offer as its customers shop very regularly at the chain.

ANALYST VIEW

Honor Strachan, Principal Retail Analyst at GlobalData, said the figures were "positive... albeit up against weak comparatives [as] good weather in June supported consumer willingness to go out and spend on new seasonal pieces, while improved trend incorporation into collections such as double layer tops and dresses, embroidered shirts and fluted sleeves will have encouraged impulse spend and outfit pairing with core classic items."

She said achieving positive comparabale sales "is a particular feat, given offline clothing and footwear sales in the UK are forecast to fall 1% in 2017."

But she added that achieving another set of positive results in Q2 will be the real test for Bonmarché. "The July to August period has become incredibly tough for clothing retailers, with sale periods dragging – not helped this year by a wet July impacting clearance levels – and little consumer demand to buy into new autumn ranges much before October. Transeasonal pieces, outfit building and new in high summer must-haves must be phased into stores and online frequently, giving consumers reason to browse and pick up wants-driven purchases."

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