Denim upgrade and web sales boost Bonmarché interim results
Has the devastation of the UK high street made a dent at the value and older end of the fashion market? Bonmarché gave us some clues on Monday when it issued results for six months to September 30.
The company is one of the UK's largest women's value retailers and it seems to have seen good progress, even though the figures don’t include October, which is when retail the downturn really took hold in Britain.
The company said that total revenue rose 5% to £97.8 million with comparable sales up 4.3%. While store-only comp sales rose just 1.6%, any rise in the current environment is good news. And online sales rocketed with a 38.6% increase, “driven by multiple improvements to customer experience and supported by stronger product ranges.” Meanwhile the product gross margin remained level year-on-year so the company was clearly able to maintain and improve its profit levels.
In fact, it improved on a number of fronts. Underlying pre-tax profit rose over 70% to £4.2 million. And post-tax profit rose to £4.2 million too, but that figure was up over 114%. And the all-important cash-flow was stronger - its net cash at the end of the period was £14.9 million compared to £9.8 million a year ago.
Importantly too, the company said it grew its market share “in a difficult trading environment”. Its share of the 50+ segment of the ‘women's outer/sportswear’ market increased from 3.2% to 3.6% for the 24 weeks ended 24 September, according to Kantar Worldpanel.
It was helped by the weather during the first half being overall “more favourable than last year,” which is interesting as that’s not something we’ve heard from any other retailer so far this results season.
Aside from the weather, Bonmarché said that its “improved cross-functional working led to progress in each of the company's five key strategic areas - product, online, loyalty, stores and systems/processes.”
Performance improvements during the half year were helped by a higher quality, more “authentic” denim offer, by the firm offsetting higher input costs caused by the weak pound through a lower level of discounting, by store and website upgrades, by better point of sale material, by better VM and more.
In fact, the investment in denim was crucial as it led to a 50% sales increase compared to its previous denim offer. And it also boosted its leisurewear, blouses, and swimwear/Holiday shop product. The discontinuation of peripheral product categories such as Ann Harvey and menswear also helped to make better use of space and drive improved product/sales density.
And the company said its trading model is becoming increasingly agile so it can deliver product in a much shorter space of time, allowing it to respond better to trends in taste and the weather.
An example of how this has improved performance was in leisurewear, where it was able to buy more at the expense of jersey tops, which were performing less strongly. And at the end of September, it was 50% committed to orders for the forthcoming spring 2018 ranges, whereas at the same time last year its commitment was nearer 80%.
It said the focus in the future will be on product categories “in which our market share under-indexes the market, for example dresses, which is the most searched for online category, and in relation to which, we have also identified the opportunity to make improvements to our proposition.”
Let the good times roll.
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