Trading Update

13 December 2018

Bonmarché Holdings plc

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

Trading Update

Change to forecast for current financial year (FY19)

In our interim results announcement we noted that, despite strong year on year growth in online sales, store LFL sales had remained weak, and the start to the autumn/winter season had been slow. For the Group to be confident of achieving the £5.5m underlying PBT forecast for FY19, sales needed to meet expectations during the key trading period from Black Friday through to Christmas.

The forecast assumed that demand would broadly follow the pattern experienced last year when, during the earlier part of November, customers delayed purchases in anticipation of being able to take advantage of Black Friday discounts. 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. Further, sales have not recovered since Black Friday, despite the application of extensive discounts. Consequently, we have concluded that sales will not recover to normal levels in the short term, and that it is appropriate to make a further revision to the forecast.

We believe that uncertainty surrounding Brexit is a significant factor affecting demand and, therefore, that it may not strengthen until the current period of heightened uncertainty ends. As we have no visibility of when matters will be resolved, we have taken what we believe to be a cautious approach to our forecast and assumed that sales will not show any significant improvement before the end of March 2019. Accordingly, and partly to reflect the high degree of uncertainty inherent in the forecast, we now estimate that underlying PBT will be in the range of breakeven to a loss of £4.0m for the current financial year. The mid-point of this range corresponds to a store LFL sales assumption for Q3 of approximately negative 12%, and approximately negative 1% for Q4, against a particularly weak comparative last year of negative 11%.

At the year-end, it will be necessary to review the fixed asset impairment calculation in light of this change to the forecast, which could result in a significant increase in the provision. As previously stated, this has no impact on cash, and will be treated as a non-underlying item in the FY19 accounts.

Financial position

The Group's cash reserves are expected to be adequate to meet its liquidity requirements even at the lowest end of the PBT range, during the period when the cash balance is lowest, around the end of March.

Dividend

As declared in our interim results announcement, an interim dividend of 2.5 pence per ordinary share will be paid on Monday 21 January 2019 to shareholders on the register on 7 December 2018.

The Board's intention is to maintain a progressive dividend policy, but it will review its stance in relation to the final dividend for FY19 when there is greater clarity about the full year's result, and the outlook for the clothing market during FY20.

Helen Connolly, Chief Executive said:

"The current trading conditions are unprecedented in our experience and are significantly worse even than during the recession of 2008/9. 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.

"I believe that Bonmarché is well prepared to weather the storm, and that we can look forward to some recovery in FY20. Accordingly, the Board remains confident in the strategy, and in the Company's long-term prospects."

- Ends -

For further information regarding Bonmarché, please call: 

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.