13th Dec 2018 09:35
LONDON (Alliance News) - Bonmarche Holdings PLC on Thursday issued a profit warning after sales during Black Friday and the beginning of the key Christmas period were weaker than expected.
Bonmarche shares dropped 37% to 50.99 pence on Thursday morning.
The clothing retailer lowered its adjusted pretax profit forecast for its year ending March to between break-even and a pretax loss of GBP4.0 million.
"The current trading conditions are unprecedented in our experience and are significantly worse even than during the recession of 2008 to 2009. I hope 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," Chief Executive Helen Connolly said.
At the end of November, the firm had guided for its adjusted annual pretax profit to be GBP5.5 million. However, in order to achieve this, sales during the period from Black Friday through to Christmas "needed to meet expectations".
Bonmarche explained it expected sales to follow last year's pattern, with customers waiting until Black Friday to splurge on heavy discounted items.
It added: "However, sales during the Black Friday week were extremely poor, particularly in the retail stores, suggesting consumer behaviour is not following last year's pattern, nor the pattern of any year we have experienced previously.
"Further, sales have not recovered since Black Friday, despite the application of extensive discounts. Consequently, we have concluded sales will not recover to normal levels in the short term, and it is appropriate to make a further revision to the forecast."
Putting some of the blame on Brexit, described as a "significant factor affecting demand", the retailer warned it does not expect its sales to improve until "the current period of heightened uncertainty ends".
On a more positive note, Bonmarche said its cash reserves are expected to be enough to meet its requirements "even at the lowest end of the profit range".
"I believe Bonmarche is well prepared to weather the storm, and we can look forward to some recovery in financial 2020. Accordingly, the board remains confident in the strategy, and in the company's long-term prospects," Connolly added.
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