Trading conditions on the UK high street are “unprecedented” and “significantly worse” than at the height of the financial crisis according to the value fashion chain Bonmarché, in the latest indication that the festive shopping period is not matching up to retailers’ hopes.
Bonmarché had hoped to turn an underlying pre-tax profit of £5.5m for its 2019 financial year. That forecast assumed shoppers would store up purchases during November and then splurge during the Black Friday shopping bonanza, Bonmarché said, as they had last year.
No such spending spree was forthcoming this year, however.
“Sales during the Black Friday week (ending 24 November 2018) were extremely poor, particularly in the retail stores, suggesting that consumer behaviour is not following last year’s pattern, nor the pattern of any year we have experienced previously,” the company said on Thursday.
Despite “extensive” discounting since in an effort to lure customers back to stores, sales had failed to recover, Bonmarché said.
The company now expected at best to break even on an underlying basis and at worst to make a £4m loss. At the midpoint of the range, that assumed a drop in like-for-like sales for the third quarter, which ends in December, of 12 per cent, and a fourth quarter decline of 1 per cent on a very weak comparative period a year ago.
Bonmarché said its cash reserves were still expected to be adequate to meet its liquidity requirements even at the lowest end of the pre-tax profit range. The company’s dividend policy will be reviewed when there was greater clarity about the full year result and the outlook for the next financial year, it added.
“The current trading conditions are unprecedented in our experience and are significantly worse even than during the recession of 2008/9,” chief executive Helen Connolly said.
“I hope that 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.”
Get alerts on Black Friday when a new story is published