Bonmarche Holdings PLC Trading Update (0729C)

TIDMBON

RNS Number : 0729C

Bonmarche Holdings PLC

27 September 2018

27 September 2018

Bonmarché Holdings plc

("Bonmarché" or the "Company" or "the Group")

Trading Update

Trading update

In the update issued on 26 July 2018 in respect of the first quarter of the current financial year, we noted that trading during Q1 had been significantly better than in the final quarter of FY18(1) , particularly the store LFL(2) 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(3) .

During the second quarter of the financial year, online sales have continued to grow strongly, in line with expectations, but sales in the stores have not maintained the momentum gained during Q1, and are below expectations. The continuation of warm weather for an extended period may have delayed demand for early autumn stock, but we believe that the more dominant factor is that underlying consumer demand for the UK high street is weaker which is impacting footfall.

In light of the recent downturn in store trading, the Board has reviewed the Company's forecasts for the remainder of FY19. Online sales are expected to grow at least at the rate seen recently, through further improvements to the online shopping experience, and the extension of online exclusive ranges. However, due to the uncertainty regarding high street footfall, we believe it prudent to reduce the store sales forecast for the second half of the year. Planned Group discretionary operating expenditure for the balance of the year has been reviewed and reduced where appropriate, but a measured view has been taken, so as not to jeopardise the ability of the Company to implement improvements designed to deliver growth in future years. 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 approximately GBP5.5m (FY18: GBP8.0m).

Accounting policies

Due to a required change to the established interpretation of IAS36 (Impairment of Assets), the revision to the forecast also requires an increase in the provision for impairment of store fixed assets. In line with most UK retailers, the Company evaluates store profitability using the "four wall" store contribution, on which basis, no adjustment would be necessary. However, according to recent guidance the Group has received regarding the interpretation of IAS36, all central overhead costs are now required to be allocated to stores, which results in an increase in the provision of approximately GBP1.0m. This will be treated as a non-underlying item, separately analysed in the financial statements, and will have no cash effect.

Financial position

The Group's financial position remains sound, with no net debt and supported by a committed, undrawn, revolving credit facility of GBP10.0m. The cash balance at the end of the financial year, typically the lowest point in the Group's operating cash cycle, is expected to be approximately GBP4.0m (FY18: GBP5.3m).

Dividends

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.

Helen Connolly, 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. We have continued to improve our proposition, particularly our digital capabilities, reflected in the strong online sales. We remain focussed on exploiting the opportunity afforded by the increasing demand for online shopping, whilst modernising the store offer and customer experience.

"Whilst it is disappointing that FY19's result is expected to be lower than originally planned, despite the challenging market, the health of the business remains strong: excluding the impact of the FX headwind, this year's underlying PBT expectation would be in line with the GBP8.0m achieved in FY18.

"The Board remains confident in the strategy set out in our FY18 results, and in the Company's long-term prospects."

- Ends -

For further information regarding Bonmarché, please call:

 
 Bonmarché Holdings plc                c/o FTI +44 (0)20 
  Helen Connolly, Chief Executive            3727 1000 
  Stephen Alldridge, Finance Director 
 FTI Consulting - Communications advisor 
  Jonathon Brill 
  Eleanor Purdon 
  Fiona Walker                              [phone] 
 

Market Abuse Regulation

This announcement contains inside information for the purpose of Article 7 of the Market Abuse Regulation (EU) 596/2014. The person who arranged for the release of this announcement on behalf of Bonmarché Holdings plc was Stephen Alldridge, Finance Director.

Notes to Editors:

Bonmarché is one of the UK's largest women's value retailers, focused on selling stylish clothing and accessories in a wide range of sizes, via its own store portfolio and online. Established in 1982, Bonmarché has over 35 years of experience in this market segment, operating across the UK.

Notes

   (1)   FY18 refers to the 52 week period ended 31 March 2018. 

(2) "LFL" refers to the year on year sales growth or decline in relation to bricks and mortar stores that have been trading for at least one full financial year.

   (3)   FY19 refers to the 52 week period ending 30 March 2019. 

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September 27, 2018 02:00 ET (06:00 GMT)