Monsoon profits exposed to tough climate
Securing Liz Hurley as the face of Monsoon has failed to help the fashion retailer stage a turnaround in fortunes, after full-year figures today revealed a second year of falling profits.
The womenswear group saw underlying pre-tax profits drop by 16% to £48.7m (€72m) in the year to May 26 in what has been a troubled twelve months for the firm.
Chief executive Rose Foster quit at the end of March amid warnings over profits, with the departure coming just weeks after group finance director Mark McMenemy left the group.
Monsoon, which also owns the Accessorize chain, had hoped to shore up profits with a group-wide review put in place last year following what it called “the most challenging year in the company’s history”, with underlying pre-tax profits down 2%.
It also signed up celebrity Liz Hurley in January – for a reported £1m (€1.4m) - as part of its “Create a Storm” promotional campaign.
But the group today reported “even more disappointing results” over the past year, with like-for-like sales down 6%.
Current trading has also deteriorated further, according to the group.
Like-for-like sales in the seven weeks to July 15 were down 13% on the same period last year.
Chairman Peter Simon, who founded the business in 1972 and has retained a 75% stake in the business, said there was “little cause for immediate optimism”.
Monsoon blamed tough trading conditions on the high street for its profits decline, but added it also faced a series of internal issues, including difficulties with its new distribution centre, opened at the beginning of the year, in addition to the senior management departures.
The group is yet to find a replacement chief executive, although it has recently appointed former Somerfield chief executive Steve Back as head of group finance and logistics.
Mr Simon said while there were “no quick fixes”, he hoped the strategy to continue focusing on the customer would return the company to strength in the long run.
Seymour Pierce analyst Andrew Wade cut forecasts for Monsoon’s current year pre-tax profits by 16% to £49 million on the back of today’s gloomy results and update.
He said: “This was a very difficult year for Monsoon. Fashions were not in its favour, competition from the likes of Primark and TopShop has been fierce, the accessories market in which Accessorize operates has become increasingly crowded and the move into a new distribution centre has caused significant upheaval.”
He added: “Although we continue to be worried about Accessorize, the Monsoon brand has significant potential.”
