Profit downgrade at Peacocks

THERE was fresh alarm in the retail sector from Peacocks today, which blamed increased competition and aggressive discounting by rivals for a profit alert.

The company said it was cutting internal profit forecasts by £4m for the full year after a disappointing quarterly performance at bonmarche, its clothing business.

The company said the market for mature women's clothing had become more difficult with a lot more competition on the High Street, more discounting by middle market retailers and demand for higher fashion content.

'Some elements of our product offer did not reflect these fashion trends and subsequently lacked appeal to key customer groups,' chief executive Richard Kirk told investors today.

The company has hired new retail and marketing directors to support the alignment and refocusing for bonmarche customers, who Peacocks has always described as 'less fashion conscious'.

Kirk added: 'Although we achieved a relatively good overall performance in a more competitive clothing market, trading in bonmarche was very disappointing compared to our expectations.

'While we remain confident that bonmarche can return to growth given the action we have taken, the board is of the view that the anticipated improvement in the performance of that business will take longer to come through than had been hoped.'

Bonmarche's difficulties were identified in the autumn after a poor summer. Despite a review, which identified product and merchandising weaknesses the problems were more difficult to overcome than the company had anticipated.

Elsewhere, Peacock's earnings were in-line with analysts' expectations. The Fragrance Shop enjoyed very good growth with sales boosted in the traditionally important Christmas seasons. In the 13 weeks to 1 January, sales at the chain, which was acquired by Peacocks in June last year, leaped 69.1%. Much of this reflected a number of new store openings though like-for-like profits were up 9.5%.