Monsoon Accessorize faces more issues than most retailers, many assessed in Retail Week Knowledge Bank’s update of Peter Simon’s international womenswear and accessories chain.
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The international side, an owned and franchised mix, has made most of Monsoon’s profits, but on less than 15% of group sales. Little wonder then that Simon offered to demerge the international business from the then AIM-quoted group in 2006 and run it himself, given he had “concerns about the exposure to more volatile revenue streams from higher risk territories”.
However, the international business could not prosper but for a substantial core domestic operation. This raises other issues. In a buoyant UK market in 2006, Monsoon’s domestic performance wavered. Domestic profitability has fluctuated with poor results again in 2008/09, before recovery in 2009/10.
Throughout this period of sales growth but variable domestic returns, UK like-for-like sales have fallen every year since 2006. Sales densities have remained below their 2004/05 peak. The fast-growing international network numbers almost 900 outlets, many franchised and mostly Accessorize. This raises issues of strategic balance between a mixed Monsoon/Accessorize domestic network and a bias towards Accessorize internationally.
With the market in 2005 having changed against Monsoon’s ethnic-oriented offer and while 2011 trends are favouring Monsoon’s ethnic-look with the company rolling out an ‘ethnic’ store format, will management be prepared to evolve this heavy investment as soon as fashion trends change again? There is also the impact of the management changes under Simon’s hands-on approach, plus a succession issue looming now he is into his 60s.