Bonmarché revealed pre-tax profit of £10.5m a year after it was acquired through a pre-pack administration deal. Retail Week takes a look at how it delivered the performance.
Value fashion retailer Bonmarché, aimed at the over 50s female, is planning to open a tranche of new stores after generating turnover of £170.3m in the year to March 31.
It is a clear sign that its new owner Sun European has successfully led it to a recovery from its administration last year when it collapsed under the weight of its debt-laden parent company Peacocks.
“It is a very pleasing performance”, says retail research firm Conlumino chief executive Neil Saunders. “It is testament to the work done so soon after the administration, particularly with store leases as they have negotiated on deals.”
After the administration Bonmarché focused on returning the retailer to its mature womenswear roots, while it has also been sharpening price points.
Saunders says: “This focus is key to its success. The younger value market is very crowded and Primark is the prime mover there.
“There is a growing older customer base due to the previous generation of baby boomers. So it is lucrative now but it could pay dividends going forward.”
Indeed, it tends to compete with Peacocks, Marks & Spencer, the supermarkets and to some extent Edinburgh Woollen Mill. But none of these retailers directly cater just for the over-50s value market.
“They are more sideways competition,” Saunders says.
It would be easy for Sun European to shy away from opening more stores, as many fashion retailers including New Look and French Connection are attempting to shrink their store portfolios as online shopping grows in popularity.
However, Saunders believes Bonmarché’s plans to open new stores in major towns and cities, including Aberdeen, Belfast and Cardiff, is the right way to cater for its customer base.
“Usually I would say it is not a good move but Bonmarché is a bit of an exception,” Saunders says. “Older shoppers tend to value a store presence more, while convenience is also key. It is important for Bonmarché to build a presence. Edinburgh Woollen has an enormous number of stores, so it seems to be right to serve its customer base.”
But Saunders warned that Bonmarché will have to ensure it strikes the right deals by keeping the rents low and costs down – “that’s where the problems strike,” he says.
With investment in store design - Bonmarché’s new store format offers customers a much lighter and fresher space to shop in - as well as more shops, the Bonmarché customer looks set to be well catered for under Sun European.