Over 50’s fashion retailer Bonmarche cheered a big jump in online sales at a time when its high street stores are feeling the pinch from the fall in footfall and weaker consumer sentiment.
The Wakefield-based firm said online like-for-like sales rose 29 per cent in the six months to September 29, but store only like-for-like sales fell 4 per cent, leading to an overall 1 per cent decline.
Half year profits were nearly cut in half as weak consumer sentiment and lower footfall hit the group.
Pre-tax profit tumbled 45 per cent to £2.3m, despite revenue nudging up to £97.9m from £97.8m. This was expected as Bonmarche warned over profits in September, blaming weaker consumer demand and hot summer weather for a decline in sales.
Bonmarche’s chief executive Helen Connolly said: “Store sales were down 4 per cent, in line with the broader market. The vast majority of our stores are still profitable.
“Despite the challenging market, the health and fundamentals of the business remain strong and the board remains confident in the strategy and in Bonmarche’s long-term prospects.
“Providing that sales during the key Black Friday through to Christmas trading period meet expectations, the board maintains the guidance published in September, being that the underlying profit before tax for the group for full-year 2019 will be £5.5m.”
Out of 321 stores, the group said there are six that aren’t profitable. It closed five stores over the first half as leases came to an end.
Asked whether these six stores will be closed, Bonmarche said some may close down or it might ask landlords for a rent reduction.
The group has revamped its online offering, making it more customer friendly.
“There is a natural shift to online sales growth. Two years ago 6 per cent of sales were online and now it’s 12 per cent. We came from a relatively low base. Online is growing dramatically,” said Ms Connolly.
“We have significantly increased choice with additional leg, skirt and dress lengths. That’s probably the biggest driver. We are also doing online exclusives such as Winter Sun and resortwear which we probably wouldn’t put in stores as there’s not enough room.”
Kate Ormrod, lead analyst at GlobalData, said: “Despite an encouraging first quarter, Bonmarche’s performance unravelled in the second quarter (store like-for-likes fell 7.7 per cent), echoing its loss of momentum in the second half last year after a decent first half.”
Ms Ormrod said the blame has been laid on weak footfall, although Bonmarche has not achieved store like-for-like growth since the first quarter of last year.
“While this is not uncommon in the fashion sector, with shoppers muting spending for the past two years, unlike players such as Next, Bonmarche does not have the luxury of a high online mix, with the channel accounting for just 12 per cent of sales,” she said.
“However, decent online trading shows that the retailer’s product appeals and that prioritisation of the channel in terms of investment has been the right move, but clearly the retailer is playing to a much smaller customer base online and needs to quicken the transition of store shoppers to online customers.”
Investec analyst Kate Calvert said that despite the weak first half sales, “there was no terminal stock issue, showing how buying flexibility has improved enabling the business to react better within season.”
The group has overhauled its supplier base over the past year and cut costs where possible to counter difficult retail conditions and a hit from the weak pound, which pushed up buying costs.