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Fashion retail's winners and losers of 2019

From high-profile acquisitions to the latest wave of company voluntary arrangements and surprise people moves, Drapers looks at who has prospered over the past year, and who will be wishing for a happier 2020.

Winners

It was not all doom and gloom in 2019. Some retailers are still beating the odds to survive in today’s tough market through bold moves that have paid dividends.

 

boohoo maura

Boohoo Group – a record-breaking year

Boohoo Group owns some of fast fashion’s most successful etailers, including PrettyLittleThing, flagship brand Boohoo, and Nasty Gal. It reported a “record” Black Friday trading weekend in November.

Group revenue jumped 43% year on year to £564.9m in the six months to 31 August, meaning its revenue for the last year has exceeded £1bn for the first time ever.

Its adjusted EBITDA was up 53% to £60.7m, while gross profit grew 40% from £218.6m in the first half of 2018/19 to £306.5m this year. The group recorded an adjusted profit before tax of £51.8m, up 45% on last year.

Fast fashion’s sustainable practices came under scrutiny at the end of last year, when retailers – including Boohoo – were called in front of the environmental audit committee to give evidence on transparency. However, this seems to have little impact on consumer demand.

Boohoo has also been on the acquisition trail. It bought the ecommerce and intellectual property assets of Karen Millen and Coast for £18.2m in August.

Primark aw19 (11)


Primark – a giant retail footprint

Primark has continued to expand its impressive retail footprint over the past 12 months, opening 14 new stores in the year to 14 September. This included its largest store to date – in fact the world’s largest fashion retail store, as decreed by Guinness World Records – in Birmingham. It now has 161 UK stores.

Primark’s revenue rose 4.2% to £7.8bn for the year to 14 September, driven by its ongoing store expansion.

The company is now focusing on international expansion as well as investing in customer experience and service.

While many brands view Black Friday as an opportunity to drive sales, this year, Primark chose to invest instead in Christmas gifting to boost footfall.

 

jd sports

JD Sports – rocketing revenue 

It was a bumper 12 months for sportswear giant JD Sports. Revenue almost doubled at JD Sports Fashion for the six months to 3 August 2019. Group revenue jumped 47% compared with the same period last year to £2.7bn. The group reported an operating profit of £200m, a 61% increase on the previous year. Profit before tax grew by 7% to £122m.

There was also good news for the Group’s chief executive chairman Peter Cowgill, who received a one-off bonus of £6m in recognition of his “exceptional performance” and was crowned Fashion Leader of the Year at the Drapers Awards in November.

JD Sports has branched into the wholesale market over the past 12 months, launching its private label Supply & Demand on retailers including Zalando, Very and Urban Celebrity. Womenswear brand Pink Soda launched on Very in the autumn.

The retailer also announced plans to upsize its Brighton store into a 16,500 sq ft superstore.

However, it was not completely smooth sailing for JD Sports. It has been forced to defend its proposed merger with rival Footasylum over concerns from watchdog the Competition and Markets Authority that it will damage competition.

Losers

This year heralded more store closures, administrations and redundancies.

hof

House of Fraser – hanging in the balance

House of Fraser has struggled to keep its head above water in 2019, and its administration was extended for a further 12 months in August, just weeks after Sports Direct owner Mike Ashley branded its problems as “nothing short of terminal in nature”.

In its delayed annual results, Sports Direct Group said: “If we had the gift of hindsight, we might have made a different decision in August 2018.”

The group reported rising revenue and profits in its half year results to 27 October 2019, as a result of its acquisitions. Group revenue rose by 14% to £204.5m following a 79.2% jump in sales from premium lifestyle and a 6.2% increase in UK sports retail sales. 

However, if acquisitions are excluded, group revenue fell by 6.4% during the period. In the results Ashley backpedalled on his previous comments regarding House of Fraser, to say that thanks to Sports Direct the department store chain’s future was ”hopefully ‘bright’”.

 

Jack Wills – Sports Direct shrinks its footprint

Jack wills menswear aw18

The preppy British lifestyle brand, once hugely popular among university students, faced a “cash crunch” this summer following tough spring trading. It was then sold to Sports Direct for £12.8m in a pre-pack administration deal in August.

Sports Direct has since shut eight Jack Wills stores and said more closures are likely if it cannot secure lower rents across the remaining portfolio. Chief executive Suzanne Harlow also departed over the summer following Sports Direct’s takeover.

 

mothercare bristol

Mothercare – the end of an era

The British mother and baby retailer is expected to wind down its UK business by February 2020 after appointing administrators in November this year. All of Mothercare’s 79 stores are expected to close, which will result in 2,500 job losses.

Business rates and rent prices, in addition to a decline in sales, are all part of the issues facing the retailer. An outdated business model and failure to invest in online retail have also contributed to its downfall.

However, the business has signed an exclusive franchise deal with Boots UK. The Mothercare product range will be made available in larger Boots stores across the UK, including Mothercare shop-in-shops over time, as well as online at boots.com. The proposed partnership will be for an initial period of five years. 

 

 

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