Interviews
Clothing & fashion retail views by Verdict
22 Feb '06
4 min read
Home goods
Shares in Instore, the parent of Poundstretcher, fell by 20 per cent yesterday after the company issued its second profits warning in a month. Despite a 3.8 per cent rise in like-for-like sales in the six weeks to January 15, Instore has reported a "significant shortfall" in subsequent sales during the four weeks to February 11. The company now warns that sales for the full-year to February 25 will be "substantially below market expectations", and that annual pre-tax profits will not match last year's £6.8m.
The sale of Hygena Cuisines is a sensible step to shore up MFI's shaky finances. By achieving a better than expected price for its kitchens division and having won £22m from the settlement of a VAT dispute the prospects for MFI now look much brighter than they did at the turn of the year.
Nonetheless, this cash injection only provides temporary respite for the UK's leading furniture market specialist; the real test will come from how it chooses to restructure itself. MFI's decline stems from the disastrous events of 2004. Firstly it reduced coverage of lower price products as part of a shift in strategy to target more affluent shoppers.
The online market is the fastest growing sector of UK retail at present and this is increasingly occurring at the expense of the high street. Consumer confidence and expectation is increasing as one in four consumers now purchase goods over the internet, meaning continual development of online presence is essential to maintain and increase market share.
However we believe Holland & Barrett could keep its mass market positioning and retain its price appeal without appearing downmarket – look at clothing retailer Primark. It has among the very lowest clothing prices on the high street yet its store interiors, new and old, are often smarter than most high street competitors' stores which offer higher price products.
Shares in Instore, the parent of Poundstretcher, fell by 20 per cent yesterday after the company issued its second profits warning in a month. Despite a 3.8 per cent rise in like-for-like sales in the six weeks to January 15, Instore has reported a "significant shortfall" in subsequent sales during the four weeks to February 11. The company now warns that sales for the full-year to February 25 will be "substantially below market expectations", and that annual pre-tax profits will not match last year's £6.8m.
The sale of Hygena Cuisines is a sensible step to shore up MFI's shaky finances. By achieving a better than expected price for its kitchens division and having won £22m from the settlement of a VAT dispute the prospects for MFI now look much brighter than they did at the turn of the year.
Nonetheless, this cash injection only provides temporary respite for the UK's leading furniture market specialist; the real test will come from how it chooses to restructure itself. MFI's decline stems from the disastrous events of 2004. Firstly it reduced coverage of lower price products as part of a shift in strategy to target more affluent shoppers.
The online market is the fastest growing sector of UK retail at present and this is increasingly occurring at the expense of the high street. Consumer confidence and expectation is increasing as one in four consumers now purchase goods over the internet, meaning continual development of online presence is essential to maintain and increase market share.
However we believe Holland & Barrett could keep its mass market positioning and retain its price appeal without appearing downmarket – look at clothing retailer Primark. It has among the very lowest clothing prices on the high street yet its store interiors, new and old, are often smarter than most high street competitors' stores which offer higher price products.
Verdict Research Ltd.
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