Half-year profits for a major clothing retailer have decreased sharply by over £12 million following a challenging six-month period marked by unseasonably warm weather and a discount-driven consumer economy.
The company’s underlying pre-tax profits have dropped by 49 per cent to £12.9 million for the 26 weeks ending 27 October 2018. This contrasts with a 3.1 per cent rise in group revenue to £414.6 million and a 6.4 per cent increase in global brand revenue to £831.8 million during the same period.
Despite facing pressure from the warm weather, the retailer experienced strong performance during the Black Friday week. However, unseasonable weather impacted profits adversely by approximately £11 million in November and could result in a similar impact in December if trading conditions do not improve. The company acknowledged this in a statement to the London Stock Exchange.
In parallel with these financial figures, the retailer highlighted the robust growth of its eCommerce revenues, which surged by 6.9 per cent in the six-month period owed to a 14 per cent growth in its eCommerce site. The company’s continued investment in technology has enhanced its online presence, featuring 17 locally optimised language websites designed specifically for mobile devices. The company reported, “Despite achieving record sales figures over the Black Friday period, with 59k visits to the site in our busiest hour, we utilised less than 20 per cent of the available capacity across our websites, enabling seamless customer experience with no slowdown in response times.”
Additionally, the company has expanded its use of radio-frequency identification (RFID) technology, now implemented across 30 stores. This technology has immediately benefited customer experience through improved accuracy and availability of stock. The company anticipates continuing the roll-out of RFID technology across all owned stores and expects full implementation by autumn 2019.
Looking towards the future, the CEO expressed confidence in the company’s ongoing transformation programme, which aims to diversify its clothing range and evolve the brand to drive growth and profitability further.
In summary, while the retailer has faced a significant decline in profits due to external market pressures, its strategic investments in technology and eCommerce present a forward-thinking approach that promises to bolster future performance.