21 Sep 2016 07:00
21 September 2016
Bonmarché Holdings plc
("Bonmarché" or the "Company")
Trading Update AND REVISION TO FORECAST
Background
In its last update, published 28 July 2016, the Company stated that trading conditions during the first quarter of FY17 had been difficult due to poor weather, but that its expectation for the full year remained unchanged, on the assumption that trading conditions normalise through the autumn season.
Trading update
Notwithstanding difficult trading conditions in July and August, overall performance was in line with management's expectations for the full year. However, trading in September has been extremely poor, largely as a consequence of the unseasonably hot weather which has not favoured sales of our new autumn ranges.
The hot weather conditions have resulted in the strong sales of residual summer stock however, and this will result in an end of season summer stock holding which is below last year's level, despite the generally poor summer season.
Nonetheless, we currently estimate that the store like-for-like ("LFL") sales result for Q2 will be approximately -8.0%, and the LFL for the first half-year will also be approximately -8.0%.
Outlook for the remainder of FY17
We approach the beginning of the second half of the year facing considerable uncertainty as to market conditions. The hot September has prevented us from gaining a representative measure of the strength of the autumn ranges, and our perception is that the clothing market generally has become more challenging. The Board's view is that in the light of September's result, and its generally less optimistic view of market conditions, it is appropriate to lower the profit expectation for the second half of the year.
Combining the effect of September's trading with a more cautious forecast for the second half of the year, the Board's view is that the Company's full year profit before tax is likely to fall within a range between £5.0m and £7.0m.
Financial position
The Company's financial position remains strong and the Company is expected to end the half year with a net cash balance of approximately £9m. In addition, the Company is supported by a £10.0m revolving credit facility, which is currently undrawn.
Dividend
Notwithstanding the difficult trading conditions set out above, the board proposes to announce an interim dividend of 2.5 pence per share, a similar level to that paid in respect of the first half of FY16, and currently expects to announce a final dividend of 4.6 pence per share.
Helen Connolly, Chief Executive said:
"I was attracted to Bonmarché by its potential to grow as a business serving the 50 plus women's value clothing market. My early impressions of the business have underpinned this, and I am currently formulating my plans for the future. The direction of travel is right, but the effectiveness of execution needs to improve. My plans are therefore likely to focus on improving the clarity of the customer proposition and operational improvements in all channels rather than a major strategic repositioning.
I have been encouraged by the enthusiasm and commitment of the Bonmarché colleagues, and am confident that despite the difficult conditions we are currently experiencing, the business will resume growth during FY18. I will provide a more comprehensive update in relation to my strategy in due course."
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