Department store chain Fenwick has assured it has 鈥渟trong foundations鈥 as it predicts big losses this year as a result of tough trading through the pandemic.
The retail giant has published accounts revealing the true scale of the retail sector鈥檚 struggles, with annual loss widening from 拢46m to 拢49m 鈥 a figure which doesn鈥檛 include any of the impacts of the corovirus pandemic as its financial year ended on January 31.
Fenwick, which has nine stores around the 海角视频 including its flagship Newcastle headquarters, Bond Street in London, Brent Cross, Bracknell, Canterbury, Colchester, Kingston, Tunbridge Wells and York, said the year proved to be 鈥渆xtremely challenging鈥 for the family-owned business and the 海角视频 retail scene in general.
Turnover dropped from 拢246.3m to 拢218m, while net sales fell by 9% to 拢271.5m, with gross margin falling by a similar percentage.
Operating losses, however, narrowed from 2019鈥檚 拢17.3m to 拢11.8m.
Now the chain says it is bracing itself for a sizeable loss this year, saying 鈥淒ue to the impact of Covid-19, we anticipate that the business will make a sizeable loss in the coming year.
鈥淭he group has put in place a two-year secured borrowing facility as part of its contingency planning and to ensure sufficient funding.鈥
In the accounts, the firm鈥檚 directors said: 鈥淚ncreased online competition and discounting on the High Street placed great pressure on the business with the result that the group recorded and operating loss of almost 拢11.8m, before exceptional items and the increase in the value of investment properties.
鈥淭he ability of the business to maintain gross margin as a percentage to turn over in such a difficult trading environment reflects the actions taken in earlier years to centralise certain functions.
鈥淭he group鈥檚 transactional website was launched towards the end of 2018 and is growing in importance as more products are introduced. The group will continue to focus on this channel to deliver future sales growth.
鈥淭he increase in the fair value of the investment properties of 拢29.8 million more than offset the operating loss, however asset impairment charges of 拢56.3 million and net onerous lease commitments of 拢5.9m were recognised to reflect the difficult trading conditions throughout 海角视频 retail.鈥
The firm also said it had made exceptional charges of 拢2.7m in respect of transformation costs which it said 鈥渟hould bear fruit in future years鈥.
Fenwick鈥檚 nine stores were closed for almost three months before reopening on June 15 when non-essential retail lockdown restrictions were eased.
In April, at the height of the pandemic and during lockdown, Richard Pennycook, Robbie Feather and Andy Doyle resigned from their respective roles as chairman, chief executive and non-executive director.
Non-executive director Steve Barber was promoted to chairman and John Edgar, who is originally from County Durham and has more than 25 years鈥 experience in fashion retail and has previously been chief financial officer at both Selfridges and Harrods, became chief executive.
A Fenwick spokesperson added: 鈥淭hese results reflect the difficult trading environment which retailers faced even before the pandemic. While sales declined, there were a number of positive areas including in beauty and food, and we continued to roll out our online offer, which has since grown significantly.
鈥淐ovid-19 has brought huge challenges for Fenwick and the sector.
鈥淲e are performing better than we hoped, online and in-store, and continue to have strong financial foundations. We look forward to continuing to serve our local communities with a premium, personalised and safe shopping experience.鈥
