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Alexon Group sales slip in the snow

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Womenswear retailer Alexon Group has issued a trading warning today after heavy snowfall across the UK had a negative impact on sales at the company.

Like-for-like (LFL) sales between November 23rd and December 18th were down 19.9 per cent year-on-year, bringing year-to-date LFLs into the negative.

Trading for the year is currently down 4.7 per cent, and the board now predicts will profit expectations for the year ending January 29th 2011 to be affected by up to £1.5 million.

A statement released this morning said: “The group has informed the bank of the current trading situation.

“Whilst net borrowings remain comfortably within the group’s current facilities, the group has commenced a dialogue in respect of one possible consequential technical EBITDAR covenant infringement.

“The bank’s response has been constructive and supportive.”

Alexon said that the cold weather has affected trade for a number of reasons, including the fact that the group’s customer base for its largest brands is predominantly an older demographic, many of whom will have chosen not to shop in the freezing conditions.

Moreover, the snow forced between 40 and 60 of the retailer’s UK outlets to close at some point during the three-week period.

It is not clear how the recent trading period will affect Alexon’s plans to grow in the year ahead.

In an interview with Retail Gazette earlier this year, Alexon CEO Jane McNally said that whereas there had been a focus on opening concessions this year, 2011 will see more bricks and mortar stores added to the company’s portfolio.

She remarked: “In the next five years we would like to have a bricks and mortar portfolio of over 100 stores, although this target may be reached earlier if site opportunities arise.”

Commenting on the situation at Alexon, Investec Securities retail analysts Katharine Wynne and David Jeary said: “Like other fashion retailers, the material shift in sourcing costs is likely to pressure margins and/or volume growth next year.

There are particular implications for Dash (mainly cotton product which is already feeling some price competition), although the overall impact should be mitigated by self-help.”

Published on Tuesday 21 December by Editorial Assistant

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