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Bonmarché blames challenging retail conditions for profit warning

By Prachi Singh

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Report

In light of the recent downturn in store trading, the board of Bonmarché Holdings has reviewed the company's forecasts for the remainder of FY19. The company said in a statement that while online sales are expected to grow at least at the rate seen recently, however, due to the uncertainty regarding high street footfall, it is reducing the store sales forecast for the second half of the year. As a result of these changes to the store forecast, the underlying profit before taxation for the group for FY19 is now expected to be around 5.5 million pounds (7.2 million dollars) compared to 8 million pounds (10.5 million dollars) reported last year.

Commenting on the update, Helen Connolly, the company’s Chief Executive said: "These are undoubtedly challenging times in the retail industry and, in common with many other businesses, Bonmarché's store trading has been impacted by weaker consumer sentiment and footfall. Whilst it is disappointing that FY19's result is expected to be lower than originally planned, excluding the impact of the FX headwind, this year's underlying PBT expectation would be in line with the 8 million pounds achieved in FY18.”

Bonmarché forecasts lower store sales

The company added that the revised forecast noted above assumes that the group pays an interim dividend of 2.5 pence per share, in line with the interim dividend paid in respect of FY18. The board's intention at this time is that the total dividend in respect of FY19 will be maintained at 7.75 pence per share, in line with FY18.

In the update issued on July 26, 2018 in respect of the first quarter of the current financial year, the company noted that trading during Q1 was significantly better than in the final quarter of FY18, particularly the store LFL sales performance. Based on this encouraging start, the Board was confident that by continuing to improve Bonmarché's proposition to customers, the group would achieve further profit growth during FY19. However, during the second quarter, sales in the stores, Bonmarché added, have not maintained the momentum gained during Q1, and are below expectations.

The company attributed lower store sales in Q2, to continuation of warm weather for an extended period delaying demand for early autumn stock coupled with underlying consumer demand for the UK high street continues to be weaker which is impacting footfall.

Picture:Facebook/Bonmarché

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