Bonmarché revealed some pretty dire numbers this morning. Profits and like-for-likes plunged in the last year.
But a cursory glance at its quarterly numbers, below, and a strategic update from new boss Helen Connolly show a rapidly improving business.
Connolly has arrived from Asda, where she was womenswear buying director.
She inherits an embattled business, which racked up two profits warnings in the space of one year, and is now taking the first steps towards implementing a new strategy.
Retail Week Prospect senior analyst Wendy Massey believes that she is on the right path.
“She took her time when she arrived to review the business but is now working really fast,” says Massey. “I think she has really hit the ground running and is absolutely doing all the right things.”
Looking at the quarters below, there is a clear divide between first half and last half like-for-likes, while online sales soared in the fourth quarter. So what has prompted the dramatic change?
Connolly has renewed Bonmarche’s focus on getting the basics spot on at the moment, and product is no exception.
A key part of that strategy was bringing in Geraldine Higgins from Monsoon as product director.
Her brief has been to modernise product around its new core customer, Lisa, a less traditional figure than her previous counterparts.
The retailer has spoken about its new approach to customer targeting before but Connolly put a little more meat on the bones this time around.
“We want to modernise products without alienating our classic customers,” she told Retail Week.
“I think we are getting that balance right with great smart-casual product that she can dress up or down. We need to be careful not to be too casual.”
“Former boss Beth Butterick, who upped sticks to Karen Millen, tried to fix product before, bringing in more transitional product such as coatigans, so Connolly will need to go further than this to make an impact”
Former boss Beth Butterick, who upped sticks to Karen Millen, tried to fix product before, bringing in more transitional product such as coatigans, so Connolly will need to go further than this to make an impact.
Of course, it’s no use having the right product if it’s not there at the right time, for the right weather.
Bonmarché’s supply chain has typically been heavily weighted towards China.
That meant that the business was hamstrung by long lead times and the inability to react to unpredictable weather or a strong customer reaction, either positive or negative, to particular trends or pieces.
Connolly and Higgins are now focused on bringing those lead times down by working both with existing suppliers and new suppliers in Turkey, Morocco and Egypt.
A lot of Bonmarché’s existing customers tend to visit frequently, so this responsive supply chain is critical because it allows for increased ‘newness’. If customers see new items in store often, they will be more incentivised to keep visiting regularly.
Bonmarché has invested in the ‘heavy lifting’ areas of its business, choosing to spend money on updating systems which were generally a decade old, and sometimes twice that age.
It also invested in a new Demandware website, matching its competitors’ technological capabilities, the benefits of which can clearly be seen in its quarterly online sales figures.
“Updating systems is far from the most exciting way to spend money and the level of investment has hit profits, but it is evident that Connolly is approaching Bonmarché’s problems head on”
Updating systems is far from the most exciting way to spend money and the level of investment has hit profits, but it is evident that Connolly is approaching Bonmarché’s problems head on, tackling costly problems and sacrificing profits in favour of investment for now.
“The profit figures [pre-tax profit was down 40%] are quite deceptive,” says Massey. “There has been a lot of investment in the core business systems, which is enabling them to ramp up lots of digital developments really quickly.”
More investment comes in the form of adding another layer of management across its store estate.
“Lots of our regional managers were not getting into store often enough,” Connolly said. “So we now have area managers reporting to regional managers.
“That means that they can get out to stores more often and see how strategy is being implemented, seeing if our windows are inspiring, for instance. It’s a necessary development because of the increased regularity of newness.”
Bonmarché is also adding in-store ordering: the technology will be in all of its stores by the end of the first half, a development which Massey terms “brilliant”.
Is it enough?
Not everyone agrees that Bonmarché is over the hump, however.
GlobalData’s Honor Strachan believes that the business may have benefited from the collapse of BHS, although management did not mention this as a contributing factor.
She adds that, due to the paucity of the market it operates in, Bonmarché should be doing better than it currently is.
“We have an aging population, so they have an opportunity to really grow their share. I think its failure to do that is partly down to the brand issue”
Honor Strachan, GlobalData
“We have an aging population, so they have an opportunity to really grow their share,” she says. “I think its failure to do that is partly down to the brand issue.
“They have spoken about the modernisation of the business a lot and have mostly tied it to product, but I think that the stores and the brand also need reviving.
“I would not assume that their current run is going to continue, they have real challenges ahead.”
For her part, Connolly sounded cautious this morning. She had previously vowed to return Bonmarché to growth this year but, when asked whether that was on track, trotted out the dry line that “current trading [was] in line with forecasts”.
It may well be that getting the basics right is not enough in the current market.