United Kingdom
26 July 2007
Liz Hurley and supermodel Lily Cole have failed to pull in the shoppers at fashion chain Monsoon, which today reported a sharp fall in profits for last year and said sales have slumped by 13% in the past seven weeks.
As well as the dismal summer weather, Monsoon has been facing tougher competition from cheaper high street rivals such as Primark and TopShop. The Asian and far eastern-style clothing in which it specialises has also run against current fashion trends.
Liz Hurley was hired at a reported £1m to be the face of the group's spring and summer ranges, while Lily Cole represents its Accessorize chain, where trading is even worse than at the Monsoon stores.
Profits for the year to May 26 fell 14% to £46.1m before tax, just scraping within the £46m to £49m range predicted by chairman Peter Simon when he warned on profits back in March. Total sales were 9% ahead at £530m although, stripping out new space, they fell by 6%.
The sales slide has accelerated sharply since the year end, with the underlying figure tumbling by 13% between the end of May and mid-July.
Also hitting profits was disruption caused by a new distribution centre.
Admitting the results "are clearly very disappointing" Mr Simon, who founded the company in 1973, said trading conditions have been the most challenging in the group's history. There would be no "quick fixes," he warned.
Mr Simon said he is now taking a more active role in running the group which will concentrate on boosting Monsoon's brands in an effort to withstand the "ever-tougher" competition.
He said: "All of this work will hopefully come to fruition in the long-term but the current trading outlook gives us little cause for immediate optimism.
"We are conscious of the fact that we are facing a deteriorating economic environment and rising interest rates that make our task all the more challenging."
The group is still seeking a replacement for chief executive Rose Foster, who left in March to head lingerie chain La Senza.
Mr Simon controls just over 75% of the shares, with the balance of the stock largely held by hedge funds.
The shares shed 13.25p to 386.75p today.
House broker Seymour Pierce has cut its current year forecast from £58.5m to around £49m. "Although we continue to be worried about Accessorize, the Monsoon brand has significant potential," said analyst Andrew Wade.
Source :
www.guardian.co.uk
