Shares of Wakefield-based Bonmarché, the fashion retailer aimed at women over 50, fell another 20% on Tuesday after it warned of a bigger full-year loss and reported quarterly sales below its expectations.
Bonmarché said it expects underlying pretax loss for the year of between £5 million and £6 million. It had previously expected its results to range from break even to a loss of £4 million.
In a trading update, Bonmarché said: “As noted in our announcement of 13 December 2018, sales during the third quarter of the financial year were below our initial expectations.
“Our priority during the ‘sale’ period covering January and February 2019 was to clear the residual autumn/winter stock.
“The sale was successful, and autumn/winter season stock levels are now 40% lower than at this time last year, although it was necessary to discount heavily in order to achieve this.
“Sales since Christmas had been slightly above the level required to meet the revised forecast range, and despite the additional discounting, our expectation was that the underlying PBT for the year would be within the lower end of the breakeven to £4.0m loss range of underlying PBT outcomes set out in December’s announcement.
“However, trading since the beginning of March has been significantly weaker, reversing sales gains made in the previous months.
“In light of this, we now believe there is a likelihood of sales levels for the remainder of the month continuing to follow this trend, which would make the underlying PBT loss for the year greater than £4.0m.
“Accordingly, we now estimate that the underlying PBT loss will be between £5.0m and £6.0m.
“We believe that the recent downturn in trading is a consequence of the demand for transitional ranges, between winter and spring, having been satisfied during January and February.
“Although sales of spring season stock benefitted from the spell of warm weather in late February, this is not yet a large enough part of the sales mix to compensate for the lower demand for transitional stock.
“Nevertheless, on the basis of this positive early reaction to the spring product, our expectation for FY20 remains unchanged.
“The group’s cash balance reaches its lowest point in the annual cycle at the end of March, when its bank facility is expected to be sufficient to meet liquidity requirements, even at the lowest end of the PBT range.
“Other than this short term borrowing requirement at the year end, the Group expects to continue to operate with a positive net cash balance during FY20.”