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Bonmarché warns on profits again

Value retailer Bonmarché has issued another profit warning. 

It comes after it put out an initial profit warning for the 2018/19 financial year in December, citing “extremely poor” Black Friday sales and ongoing Brexit uncertainty

It said at the time that it expected underlying profit before tax to be in the range of “break even” to a loss of £4m for the current financial year.

Total sales for the 13 weeks to 29 December fell 8.1% year on year

Bonmarché’s priority during the “Sale” period covering January and February was to clear residual autumn stock. Autumn season stock levels are now 40% lower than at this time last year. However, trading since the beginning of March has been significantly weaker, “reversing sales gains made in the previous months”.

Bonmarché now estimates that the underlying loss before tax will be between £5m and £6m.

However, the company said that its predictions for the 2019/20 financial year remain unchanged. The latest trading statement reads: “We believe that the recent downturn in trading is a consequence of the demand for transitional ranges, between winter and spring, having been satisfied during January and February.

“Although sales of spring season stock benefited from the spell of warm weather in late February, this is not yet a large enough part of the sales mix to compensate for the lower demand for transitional stock. Nevertheless, on the basis of this positive early reaction to the spring product, our expectation for FY20 remains unchanged.

“The group’s cash balance reaches its lowest point in the annual cycle at the end of March, when its bank facility is expected to be sufficient to meet liquidity requirements, even at the lowest end of the [profit before tax] range. Other than this short term borrowing requirement at the year end, the group expects to continue to operate with a positive net cash balance during FY20.”

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