Bonmarché backs rescue bid from billionaire Philip Day after 'poor' sales and bad weather

Struggling fashion retailer seeks to stave off collapse through £5.7m takeover deal from Edinburgh Woollen Mill owner

Dubai-incorprated company, Spectre, offered 11.4 p per share for Bonmarché (Getty)

Struggling fashion retailer Bonmarché has u-turned on its opposition to a £5.7m rescue bid from billionaire Philip Day after warning of “poor” trading so far this financial year.

Bonmarché, which focuses on womenswear for the over-50s, blamed “continued weakness in the underlying clothing market” and bad weather in June, as it warned losses are expected to surpass the £5-6m it previously forecast.

The Yorkshire-based company which employs 1,900 full-time equivalent staff at its 312 stores is seeking to stave off being the latest high street name to collapse. Mr Day, who owns Edinburgh Woolen Mill Group warned in April that he expected a “material reduction” in headcount at Bonmarché if his takeover is successful.

His Dubai-incorprated company, Spectre, offered 11.4 p per share for Bonmarché, but was rebuffed by the board which has now changed its position after continued weak sales amid a gloomy start to the summer.

In a trading update on Wednesday Bonmarché said that, in previous years, better weather had helped pick up summer sales “at some stage during the selling season” but that conditions were not following those patterns.

The company has slashed costs by around £6m and ended all but essential investment.

However, Bonmarché's auditor PwC said that it may have to make clear that it is uncertain that the company can continue as a going concern, unless improvements in trading happen before 26 July when the accounts are signed off.

The board said it still does not believe Spectre’s offer adequately reflects the “potential longer term value of the business”, but that it offers short-term certainty and so has therefore been recommended to shareholders.

Mr Day - who owns a number of retailers such as Peacocks, Jane Norman and Austin Read - acquired a majority stake in Bonmarché in April through Spectre, triggering a mandatory takeover bid.

Spectre said at the time that it would assess the viability of Bonmarché’s stores and shut under-performing sites, cut staff numbers or seek lower rents.

The board said it believed Mr Day would make a “successful long term owner” due to his experience in the fashion retail sector.

Emma-Lou Montgomery, associate director at Fidelity Personal Investing, said: “Mr Day made his fortune with Edinburgh Woollen Mill, and also controls Peacocks, another value retailer that owned Bonmarche until it went into administration in 2012.

"Whether the Bonmarche brand is about to become another ‘name’ that disappears from the high street, remains to be seen.”