Monday, 17 December 2018 13:12

ChicGeek Comment November Pain

ASOS profits down black fridayThe darling of British online retail, ASOS, today, issued a statement saying it saw “significant deterioration” in trading in the run-up to Christmas. Blaming the weather and a high level of discounting and promotional activity across the market, it said it lead it to increase its own special offers, which typically eat into profit margins. 

November 2018 is set to go down as one of the worst retail months in recent memory. Mike Ashley, the Sports Direct boss, was recently quoted as saying, “November was the worst on record, unbelievably bad”. He said “No one could have budgeted for that. Retailers just cannot take that kind of November. It will literally smash them to pieces.”

Left - ASOS' HQ - Black cats for Black Friday?

While ASOS only saw a slowing in sales growth - it now expects sales growth of 15% for the year to August 2019, down from 20% to 25% - it also shows the chill running through the entire retail sector.

A perfect storm of lower footfall, Black Friday discounts, Brexit shaking consumer confidence and a highly competitive market in general, is making things very dicey for the retail sector. Retailer, Stuart Rose, formerly of Marks & Spencer, told ITV News, “I sense this is a very slow Christmas … You have the uncertainty of Brexit, people are uncertain about what the future is going to look like next year. [Consumers] have their hands in their pockets. Car sales? Down. House sales? Down. Big ticket sales? Down. I suspect there will be some uncomfortable trading statements in the early part of January.”

Even the juggernaut of Primark is reporting a slowdown. It has warned of “challenging” trading conditions. John Bason, the finance director of Primark’s parent Associated British Foods (ABF), said “I think it is a call on quite mild weather during November and I think it’s affected footfall.” This is important to Primark because it doesn’t sell online. Bason told Reuters that while sales at stores open more than one year were “just positive” in September and October, they had turned negative in November. 

On a brighter note, overall consumer spending rose 3.3% year on year in November, but it was the lowest growth since March, despite the boost from Black Friday, according to Barclaycard. Clothing spending contracted by 2.9%, the biggest fall since October 2017, while spending on household appliances was down by 14%.

One thing interesting to note is ASOS mentioning its slowdown in Europe. It said trading conditions across Germany and France, which account for 60% of the retailer’s EU sales, have become significantly more challenging, which means this is a wider problem than Brexit. ASOS said “The current backdrop of economic uncertainty across many of our major markets together with a weakening in consumer confidence has led to the weakest growth in online clothing sales in recent years. We have recalibrated our expectations for the current year accordingly.”

Primark Birmingham profits down black friday

So, let’s look at this weather. According to the Met Office, “November began with relatively cold quiet weather, but from the 3rd to 14th it was mild with a predominance of southerly winds. It was cold with easterly winds from the 19th to 26th, with frequent rain or showers for the east and south-west. It turned very mild, wet and windy in all parts of the country from the 27th onwards. The provisional UK mean temperature was 7.3 °C.” This up and down weather isn’t particularly unusual for November and we had two decent cold spells to help shift more seasonal, colder weather stock. The weather is always an easy excuse for retailers reporting bad figures.

Right - Primark is opening its largest store in the world in Birmingham this month

Black Friday, though, is wiping out profit margins for retailers with consumers expecting huge discounts and it’s stopping people from hitting the high-street. UK retail endured the biggest drop in footfall for the month of November since 2009. It also marked the 12th consecutive month of footfall decline. Discounts were made for online; no pushing and shoving to then leave disappointed. If they’ve got it, it’s in the basket, and you probably don’t buy anything else while you’re there unlike if you’d gone to the high-street or a shopping centre.

Laura Ashley just announced it was closing a further 40 stores and, last week, Bonmarché issued a profit warning and Blue Inc fell into administration.

Many retailers will be praying for a good Christmas, but to make up these sales in the three weeks to Christmas will be tough, especially with so many factors working against them. Primark and ASOS are strong retailers and will weather this storm, but many will not. To continue the weather metaphors, this could be the hardest frost to hit the retail sector in many years and anybody small or not hardy enough will be dead before the winter is out.

Published in Fashion
Sunday, 16 July 2017 10:17

ChicGeek Comment Erdem X H&M Menswear

With collaborations as common as the cold it’s become hard to generate the excitement that those previous big reveals had. Swedish mega-retailer, H&M, has just announced, much later than usual BTW, their collaboration with British-based, Canadian designer, Erdem.

This is a coup for Erdem, as, apart from amongst fashion circles, few know the label and hardly any men, as they don’t do menswear. Known for long Valentino like dresses in intricate florals, it ticks the box nicely for H&M to do something Gucci-like and is a switch up from the previous year’s Kenzo collection.

This will clearly be riding the Gucci maximalist wave, but I’m hoping it’s more Laura Ashley/Liberty of London/House of Hackney men’s than a straight copy of Gucci. The patterned silk pyjama set seen in the video - below - looks very Gucci, but let’s hope there’s some freshness in the other pieces.

Erdem’s full name is Erdem Moralioglu and he's never designed menswear before. Here’s what he said about designing men’s, “I found it a real joy,” says Erdem. “It’s really about looking at a wardrobe of pieces, and focusing on the exact design details. There has to be an easiness to menswear, and a sense of reality. I’m so happy with it, and I think so many women are going to love the men’s collection too.”

The ideas behind the collection sounds like an eccentric, British mixed bag of references. “The collection reinterprets some of the codes that have defined my work over the past decade”, shares the designer. “It’s also inspired by much of my youth, from the English films, 90’s TV shows and music videos I grew up watching to memories of the style that defined members of my family. Taking from these inspirations I imagined a group of characters and friends off to the English countryside for the weekend. There’s a real play in the collection between something decidedly dressed-up and equally effortless”, he says.

I think this collection will have a niche market and maybe they won’t make the volumes or have the number of stores stocking it like in previous years. But, I’m actually excited about this one as this feels to be catering for the lovers of fashion rather than labels. Hits stores November 2nd.

Published in The Fashion Archives