Winter is coming, or so Britain’s downtrodden fashion chiefs hope after a summer to forget.
Last week’s profit warning from womenswear retailer Bonmarché, which wiped 25% off the value of the company’s shares, underlined how damaging the wrong sort of weather can be for chains. The Indian summer had put a dampener on sales of new season winter coats and jumpers, said chief executive Helen Connolly of the value retailer, which only two months ago had bemoaned a lack of sunshine.
And Bonmarché has not been alone this year in complaining about wintry summers and summery winters, with some of the high street’s biggest names – from Next to H&M, River Island and even fast-fashion juggernaut Primark – struggling to trade through topsy-turvy seasons.
The malaise is making analysts worried about the fortunes of market leader Marks & Spencer, which in July reported its worst quarter of clothing sales in eight years, and is not due to update the City until November.
In the wake of last week’s weaker-than-expected figures from H&M, Bernstein analyst Jamie Merriman warns that the slow start to the new season could force retailers to offer discounts. “We expect that H&M and the industry more broadly have more stock than planned for at this point in the year, which could again lead to higher than expected markdown,” she says.
This is bad news for an industry that is struggling as Britons buy fewer new clothes, choosing to spend spare cash on going out. All Bar One owner Mitchells & Butlers, for example, toasted the recent hot spell as it drove more punters into its pubs.
“The weather is a perennial excuse for poor performance, but I do think that ... it has become a more valid reason for [it],” says Conlumino analyst Neil Saunders. A crowded and competitive marketplace and reliance on discounting to shift stock are also behind the sector’s woes, he says, adding: “Given the weather is not going to behave any time soon, retailers need to look at how they can shift their models to be more reactive to sudden changes.”
One of the retailers still managing to thrive is the Inditex-owned Zara chain, which last week bucked the trend by reporting strong figures. The Spanish group, which manufactures and designs its own clothing, is uniquely placed to react to catwalk trends and erratic seasons, getting clothes from factory to store within days.
Saunders says retailers should be trying to move away from traditional seasonal stock changes by putting more focus on “layering” – which allows for warm- and cold-weather lines to be stocked together. Buying some products on shorter production runs would allow chains to react to weather changes, he suggests.
M&S tested this in May, selling pieces of its autumn collection in store at the same time as it showed them to fashion press.
But other forces are also bearing down, with Next boss Lord Wolfson pointing to the influence of falling real wage growth on high-street sentiment. At its recent trading update, the Tory peer described a volatile sales picture with wildly different figures emerging from stores around the country, as autumn arrived in Aberdeen, but Londoners were still trooping to work in flip-flops. The divergence made it hard to gauge whether winter ranges were a hit or a miss, he said. “Consumers are not buying stock unless they absolutely need and want it … that’s a symptom of underlying weakness in consumer demand.”
The Met Office’s long-range forecast for October suggests the unsettled weather will continue but it promises “increasing chance of chilly nights and frosts”. Fashion chiefs will have their fingers crossed.
