Jim Armitage: Give Bonmarche management a dressing down for this poor Brexit excuse

You don’t have to be a Brexiteer to smell a rat in Bonmarché’s excuse for its profit warning.

Bonmarché sells cheap clothes to older women. Or at least, that’s what it tries to do.

Today it said those sales had collapsed, absurdly blaming Brexit.

Yep, Bonmarché’s management expect us to believe shoppers have suddenly become so nervous about our departure from the EU that they are refusing to spend £12 on a Bonmarché jumper.

Sorry, but — to use a phrase commonly heard in Bonmarché’s shops these days — I just won’t buy it.

Look at the story this business has been telling investors in recent months. In July, it said trading was improving at its stores. In September, it issued a profit warning. Three weeks ago, it said it was on track to meet forecasts of £5 million profit. Today, it says it will make a loss of £4 million. This points to a Bonmarché-specific mess; not Brexit.

That’s not to say conditions aren’t massively tough on the High Street, but savvy stores are offsetting poor shop sales with a big online presence. Next sells more than half of its stuff online, Bonmarché just 12%. It is growing its digital store, but is late to the party.

Bonmarché may have too many uninspiring stores, and been sluggish online, but there is one positive in today’s statement: the company isn’t yet in a debt crisis. In September, it had net cash of £9.6 million; down from £15 million a year earlier but still positive. It even reckons it could pay a progressive dividend this year (though given the state of trading, that would be foolhardy in the extreme).

This means there is hope for it, I just wonder whether the current management team are the right people to take it forward.

With any luck the hammering its shares took today deters others from spuriously blaming Brexit for their woes.

Serco

Rupert Soames is endearingly modest. Ask him why his Serco group is doing so much better than others in his hobbled industry and he puts it all down to timing.

Serco was the first to have a crisis, so is now the first out of it. Or, as he puts it: “We were early adopters of financial carnage.”

In fact, his achievements are rather more profound than that. He took Serco out of the unprofitable private sector work that was financially draining and distracting it from its core government contracts. Then he focused on only taking on public sector work without absurdly high risk and low margins.

The strategy has worked, and because it is now one of the strongest in the sector, he is in the best position to pick up decent contracts from the weak. Witness the knockdown price he paid for Carillion’s NHS contracts.

Doubtless Soames is watching out for similar spoils to emerge from Interserve and up-for-sale Amey — two late adopters of financial carnage.