Bonmarche Holdings PLC Trading Update (0729C)
27 September 2018 - 4:00PM
UK Regulatory
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 +44 (0)20 3727 1000
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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END
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