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With UK interest rates having risen again on Thursday in response to surging inflation, the release of the latest BDO High Street Sales Tracker (HSST) could be evidence of the last gasp of a shopping frenzy ahead of consumers tightening their belts.
The HSST said that April was “a month of two halves as retail sales growth starts to slow”.
The headline figures showed the 14th month of consecutive retail sales growth, with total like-for-like sales up by 44.9% compared to April 2021.
But growth began to slow in second half of month and online sales also recorded a disappointing growth. Total non-store like-for-like sales rose 6.4%. That may have been the first positive result this year, but it was only a modest rise from a relatively low base of +28.2% in April 2021.
And BDO said that while fashion and lifestyle categories saw increases in their total like-for-like sales compared to 2021, the homewares sector saw almost no change, growing only 1.1%.
In fact, fashion saw the biggest growth, with total like-for-like sales increasing by 58.7% for the month, from a base of +84.2% for the same time last year.
But what evidence is there for BDO’s view that 2022 retail might have started to falter? Well, the first week of the month saw growth of 81.96% compared to the same week the previous year, followed by an increase of 86.7% in the second week.
Yet the final two weeks saw much lower rates of growth. In the third week like-for-like sales grew 18.41% compared to the same week in 2021 last year. Sales then grew by 14.4% in the final week of April 2022.
Those figures may be partially expected given that for the first two weeks last year, the UK was still under lockdown and the second two weeks reflect the reopening period in April 2021.
But the fact is that the reopening last year didn’t exactly see shoppers surging back to stores in ‘normal’ numbers as many people remained nervous about shopping physically. So with shoppers theoretically almost back to normal now, the relatively small double-digit rises this time aren’t that impressive. The jury’s still out on what this means for the next few months.
BDO’s Sophie Michael, Head of Retail and Wholesale, said: “We continue to see retail like-for-like sales outperform expectations, as April saw yet another month of positive headline numbers. However, a closer look at the data reveals a distinct shift in the middle of the month, with growth across all categories falling substantially in the final two weeks of April. There are a number of factors behind this. Stores reopening in the latter half of April 2021 resulted in a higher base with which to compare this month’s results. We also saw the traditional slowdown in discretionary spending over the Easter bank holiday weekend between the third and fourth weeks of April.”
But she added: “The cost-of-living crisis has also undoubtedly contributed to the slowing in growth, as consumers reduce their discretionary spending. Consumer confidence is lower than at any point since the financial crash in 2008 so, when combined with high inflation, it’s no surprise to see growth trending downwards. The barely noticeable growth in online sales is another indicator that discretionary spending is slowing down.
“This volatility in consumer demand comes at a time when retailers’ supply chains are more stretched and difficult to manage than ever. They will need to maintain the flexibility and resilience they demonstrated throughout the pandemic if they are to meet customer expectations and maximise their sales.”
There was good news and bad in Boohoo’s final results for the year to February, but much of the bad news had been flagged in advance and the firm said the pain it's feeling now should be balanced by future growth.
On the plus side, the results report showed it enjoying a “significantly increased market share in the UK and US” compared to two years ago with total sales up 61% in that period.
It also said it has extended its target addressable market through acquisitions, with up to 500 million potential customers, and now has increased warehousing and distribution capacity, capable of supporting over £4 billion of net sales.
The headline figures for the year saw the Boohoo, PrettyLittleThing, Nasty Gal and Karen Millen owner achieving revenue of £1.982 billion in FY22, up 14% from FY21 and 61% higher than FY20.
Gross profit rose 10% year-on-year to £1.041 billion and rose 56% on a two-year basis. But the gross margin was down 170 bps over one year and 150 bps over two.
Adjusted EBITDA was £125.1 million, down 28% against FY21 and down 1% against FY20, while statutory pre-tax profit was down 94% on the year at £7.8 million and 92% lower than two years ago. That was due to “significant” freight and logistics cost inflation and “record investments across [the] multi-brand platform”. Boohoo said it saw “£60 million of pandemic-related shipping cost headwinds and investment in launching our new brands”.
That investment has included important developments for the future such as the relaunch of Debenhams, “adding a new dimension of a digital department store to the group's portfolio and extending the group's target addressable market”. Plus there was the integration and relaunch of the newly acquired Dorothy Perkins, Wallis and Burton brands, and the purchase of new offices in London's West End, for its London-based brands and staff.
CEO John Lyttle said: “Over the past two years, we have significantly increased market share in our core geographies and we have grown active customer numbers by 43% to 20 million. Our focus has been on investing to build a strong platform. In the year ahead we are focused on optimising our operations through increasing flexibility within our supply chain, landing key efficiency projects and progressing strategic initiatives such as wholesale and our US distribution centre. This will ensure that the group is well-positioned to rebound strongly as pandemic-related headwinds ease.”
With that in mind, its plans are on track for automation of its Sheffield warehouse going live in FY23, “driving material efficiencies”, and the opening of a new distribution centre in the US in FY24, “transforming [the] delivery proposition”.
Looking back at the latest year, growth remained strong in the company's largest market, the UK, at 27%.
But overall growth was still hurt by three factors: returns rates that increased significantly in H2, “ahead of both expectations and pre-pandemic levels”; consumer demand that was “subdued” as a result of lockdowns in key markets throughout the year; and its international business being dented by extended delivery times.
That meant international sales fell by 3% with international revenue now representing 39% of its total, compared to 46% a year earlier. That fall in the percentage wasn't only down to lower global sales, but was also affected by that particularly strong growth in the UK and the mix impact from brands acquired in the last two years.
And heading into the new financial year, the group is planning the business on the basis that the pandemic-related external factors impacting performance in FY22 will continue for the period.
Its priorities therefore are focusing on optimising its operations. This will include “targeting increased sourcing from near-shore markets, leveraging the flexibility that exists in the group's diverse supplier base to reduce lead times that have been negatively impacted through global supply chain challenges in FY22 and exposure to fluctuating inbound freight costs that remain elevated”.
It will also operate with lower levels of inventory “through tighter stock management and increased levels of open-to-buy, giving greater flexibility to react to changes in demand midseason”.
And the group has launched a cost efficiency programme too.
But while headwinds are expected to continue and be a major problem in H1 (albeit with Q2 showing an improvement on Q1), the second half should be much better. It said the performance is expected to improve in H2 “with sales growth accelerating as the group annualises high returns rates and normalising consumer demand, with profitability improving as it benefits from key strategic initiatives and leveraging of overheads”.
With all that in mind, it “expects to emerge from the pandemic in a far stronger position compared to two years ago. Reflecting significant and ongoing investments in its platform, brands, distribution and people”.
Matchesfashion has named a new Chief Financial Officer with Dave Murray set to join the luxury retailer and e-tailer from its peer Farfetch, where he was Senior VP of Finance.
Murray will start his new role this autumn, replacing Sean Glithero who’s leaving to take a career break.
He has 20 years of experience in the luxury and retail sectors, including three years at Farfetch, where he worked alongside that company’s CFO, with operational responsibility for all areas of finance.
Before that, he was in senior finance positions at Amazon in the UK from 2014, which followed a decade at Sainsbury’s where his final post was Head of Retail Finance in 2014.
CEO Paolo De Cesare called him “one of the luxury industry’s most respected finance professionals” and said he’ll “provide us with invaluable e-commerce expertise. We expect the next $100 billion of luxury market growth will come from further digital penetration and Dave’s vast experience in this area will be immensely valuable”.
His appointment also follows the arrival of Prenisha Harry as HR Director, who joined from Pandora. She has also worked at Inditex.
And at the same time as it shared news of its two new senior hires, Matchesfashion also announced its Grand Tour Italy Part II.
Working in partnership with Marie-Louise Sciò, founder of Issimo (a new e-commerce and lifestyle platform directly inspired by Italy’s rich heritage of style, design and culture) and the CEO and Creative Director of the Pellicano Hotels Group, it’s a three-part tour of Rome, Florence, and Naples/Ischia. We’re told it “will celebrate the return of global travel and showcase Matchesfashion’s exclusive vacation capsules through a series of unforgettable events”.
The journey will also be captured in a cinematic mini-series, shared with the retailer’s audiences worldwide.
The first stop is being marked by the launch of Marie-Louise Scio and Robert Rabensteiner’s vacation edits online via a pop-up in Rome until 8 May. This will be followed by an event and installation at the firm’s 5 Carlos Place townhouse in London, before heading to Florence (10-12 June) and Naples/ischia (19-22 July).
The Grand Tour is meant to be all about the experience for its high-spending guests and includes cocktail parties, special dinners, shopping, dancing, private art tours, and relaxing by the sea.
Retail destinations “fared well” over the early May bank holiday with a strong uplift in footfall from the week before, according to footfall expert Springboard. The rise averaged 8% over the three days from Saturday to Monday.
This strong footfall performance also narrowed the gap from 2019 considerably, to an average of just -8.3% between Saturday and Monday across all retail destinations, it noted.
Footfall last week (24-30 April) rose 3.1% across UK retail destinations although this was heavily influenced by a significant uplift of 77.9% on Sunday, due to the low comparable of Easter Sunday in the week before.
On Monday (26 April), footfall declined by just 0.4% driven by a drop of 11.9% in retail parks. This was due to a strong comparable in this destination type on Easter Monday in the week before, said Springboard.
Saturday and Sunday were the strongest trading days, with rises in footfall of 9.5% and 11.3% respectively. There was less of an uplift in consumer activity overall on Monday (+3.3% from the week before), but retail parks performed strongly with a rise in footfall of 12%.
High streets and retail parks recorded particularly strong improvements versus 2019, to -8.5% below 2019 in high streets over the three days and -5% from 2019 on Monday, and -2.6% below 2019 in retail parks over the three days with footfall 1.2% higher than 2019 on Sunday.
Footfall was 22.5% higher than last year in all UK retail destinations over the three days, and 36.8% higher in high streets rising to 52.1% higher than 2021 on Monday.
The lead-up to the bank holiday weekend saw noticeably lower footfall than the week before across all three destination types. Over the three days between Tuesday and Thursday, footfall declined from the week before by an average of 7.3%.
In city centres around the UK, activity also increased over the three days by an average of 8% in Central London and by 15.9% in regional cities outside of the capital.
It also appears that Easter trips had ended last week, with declines in footfall in coastal and historic towns over the seven days up to Saturday (-8.8% in coastal towns, -1.8% in historic towns). However, footfall in both of these town types bounced by over the bank holiday weekend, with rises that averaged +8% and +14.7% over the three days from Saturday to Monday.
A new premium footwear brand is debuting in the UK with Lerins — launched by Dune founder Daniel Rubin and "Inspired by the unspoilt Lérins Islands off the French Riviera” — unveiled on Tuesday.
The new label for both women and men focuses on “sustainable trainers”, all designed in London and made in Portugal from materials sourced in Europe.
It avoids claiming to be fully sustainable but said it’s “busy working on that” and is “committed to making every effort to become as sustainable as possible”, as well as being as transparent as it can.
Launching this month, the shoes retail at £130 via www.lerinslondon.com.
The company said it “puts a directional and sustainable twist on the retro-inspired court trainer. Combining optimal comfort with trend-led style credentials, Lerins is introduced with 10 options and in a palette of in-style shades including muted camel and vibrant green”.
It added that the label “joins the dots between modern styling and socially- and environmentally-conscious crafting techniques, without compromising comfort or quality”.
Rubin, the fourth generation of his family to be involved in manufacturing footwear, founded Dune 30 years ago and said of his new venture: “One thing my experience has shown me is making shoes is a complex business — there are well over one hundred processes in the manufacture of footwear.”
He added that his mission is “to make shoes in a more sustainable way”. Leather, although a bi-product of the food industry, “requires the use of lots of water and chemicals to be produced. I was determined, with Lerins, to address these challenges and make my shoes in a more environmentally and socially responsible way”.
The leather used in the new products is produced “to a gold standard” in certified ‘Leather Working Group’ tanneries where the provenance of the raw material is known and approved, and the use of water and chemicals tightly controlled.
It’s also using vegan leather supplied by Italian partner Vegea that’s made from the grape skins left over from wine-making. This is combined with vegetal oils and natural fibres to make a durable and leather-like product.
The line-up comes with a leather and canvas option too and the the canvas used is created from recycled sea plastic. Meanwhile, shoelaces are made of organic cotton and soles from recycled and virgin rubber.
The sustainability element extends to the packaging that’s fully recyclable, compostable or biodegradable and and has featured energy efficient processes in its logistics and operations “wherever possible”.
Speculation around Missguided’s future is building and a number of big-name retailers and private equity giants are understood to be circling the troubled firm with some expected to made bids for the fast-fashion retailer this month, according to various reports.
Retailers including JD Sports, Asda, ASOS, Shein and Frasers Group plus finance businesses CVC and Carlyle are among those believed to be showing interest in the business.
Some of those (Frasers, ASOS, JD Sports) are already known for being interested in strong brands that have hit difficult times, or others have existing relationships with Missguided (such as Asda that hosts Missguided concessions in its stores).
The move comes after Missguided said it had brought in advisers from Teneo to look at strategic options for the business, which includes a possible sale. The decision coincided with the announcement late last month that its founder and CEO Nitin Passi is stepping down from leadership of the firm.
The brand is now being guided through this phase by a new leadership team headed chairman Ian Gray and chief digital officer Rafaele Petruzzo, who was formerly CDO at Arcadia group.
Last year, investor turnaround specialist Alteri stepped in to rescue Missguided after it was hit by supply chain issues and a difficult post-pandemic trading period. Alteri invested £53 million for a 50% stake in the business.
With its Tu Clothing label now being a £1 billion business, it’s no surprise that supermarkets giant Sainsbury’s is beefing up the executive team at the top of its non-foods business.
And now former John Lewis fashion buying director Christine Kasoulis has joined it to head its fashion, furniture and home business.
A veteran of John Lewis where she worked for over 30 years, she’ll now once again work with Paula Nickolds, the former John Lewis chief who joined last year as General Merchandise and Clothing Commercial Director and as a board member.
The news was first reported by Retail Week.
Kasoulis left John Lewis after 32 years when it restructured in 2021 and Nickolds said she was “uniquely well qualified” for the role at Sainsbury’s.
The news comes after Sainsbury’s reported strong sales growth for its Tu Clothing line that now generates more than £1 billion in revenue annually. The company also said it’s selling more of the label’s products at full price — 89% compared to 65% two years ago.
Although known mainly as a supermarket, Sainsbury’s has giant non-food operations, including its Argos general merchandise offer, its Habitat furniture and homewares business, and its own-brand non-foods.
Cooee, a Cambridge, UK-based AI platform that helps mobile apps boost customer retention with personalised engagement, raised £300k in pre-seed funding.
Backers included Jenson Funding Partners, as well as several angel investors from the United States, India and UK.
The company intends to use the funding for further product development, increase its e-commerce store reach and launch an augmented reality version of the product.
Led by CEO and founder Shwetank Tamer Cooee provides a SaaS-based, low-code platform that delivers one-to-one personalised in-app and push notifications that help businesses increase revenue and reduce churn. It uses AR, computer vision and machine learning to create unique engagements for every customer in real-time.
It is available on mobile apps, desktop, Woocommerce and Shopify with a roadmap to add Canva, Wix and other popular eCommerce channels.
The fashion industry’s commitment to sustainability has never been made more clear. Maje intends to offer its customers a transparent supply chain for 100% of its products within three years. This strategy is in line with its objective to have at least 60% of its products made with at least half of more environmentally friendly materials. To help it achieve their goal of transparency, the brand as well as the entire SMCP group which generates more than one billion euros in sales, has entrusted the French start-up, Fairly Made.
This challenge does not seem to intimidate the young, fast-growing company. It has recently expanded its premises in Paris’ sustainable fashion hub, La Caserne, in the city’s 10th district, and additionally works with six LVMH-owned brands. Whether they are contemporary fashion brands, luxury giants or independent labels, Fairly Made, founded by Laure Betsch and Camille Le Gal in 2018, promises to provide a methodology to its roster of clients.
The start-up was created to support brands in their buying habits and to help them evolve environmentally and socially. The founders have had work experience in the buying departments of large companies such as Chanel, H&M, and Louis Vuitton which allowed them to identify the needs of brands prior to embarking on their entrepreneurial adventure.
However, in 2018, environmental issues were only emerging and were not yet taken seriously by the fashion industry. In their early days, Betsch and Le Gal had to spread the word, and this was first done through capsule collections made with a more sustainable approach for fashion and textile industry players. The start-up has the contacts and flexibility to operate quickly and with limited quantities, which notably allowed a brand like Des Petits Hauts to take its first steps towards more responsible sourcing in 2019.
'These transparency issues will become the standard'
"Our mission was to improve the social and environmental impact of the textile industry, to bring about change. The capsules were ideal for this because they allowed for rapid implementation," explained Le Gal. “Now, we are working in depth, with the aim of eventually changing 100% of the collections. These transparency issues will become a standard. New emerging brands must have this issue ingrained in their DNA, and those that are established have a lot of catching up to do."
Fairly Made provides brands with a solution that enables them to trace their entire value chain and evaluate the quality of each of its products according to five criteria: environmental, social, traceability, recyclability and sustainability.
"With eco-certified capsule collections, brands needed concrete solutions and we provided them with certified factories and materials. The brands then asked us to help them with the rest of their supplier base. Suppliers were coming up with suggestions for labels and certifications, but brands didn’t know how to position themselves on these issues. We had the expertise to analyze suppliers and the impact of products. And we positioned ourselves as a trusted third party," said the co-founder.
Fairly Made developed its own platform in partnership with DNVB Asphalte and women's fashion brand Des Petits Hauts. Two industry players with different profiles that have allowed Fairly Made to test its technological solution and its versatility according to the brands' business models.
The solution allows them to collect information on the supplier base and to then start collecting information from these partners.
“On an initial data collection, we centralize all the information that the brands have," explained Betsch.
Some have an ERP (enterprise resource planning) system that has already compiled certain data, others do not. Usually, it's a true driver in understanding how the brands work and where their pressure points are. Very often, they know the tier 1 plant. But then it's an exploration. It's a co-management with the suppliers, because it requires extra work for the suppliers to gather the information. Our statistics tell us that we know 70% more of the supplier base from the second data collection. The brands are at the bottom of the pyramid, which allows them to identify the biggest impacts along the chain and to direct their attention to them. Often we deal with repeat business because it's the highest volume and the suppliers where there are the biggest orders."
The company, which explains that it carries out a diagnostic analysis in less than two months, emphasizes a SaaS solution that is accessible to companies via a monthly subscription so that they can directly understand their data, transformation plan and performance. This solution now accounts for 70% of the company's turnover and it intends to expand its customer portfolio, which currently includes around 50 companies in France and Europe such as M.Moustache, Patou, Balzac, Dior, Cyrillus and TBS.
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Wella Company announced on Friday it has added clean hair care brand Briogeo to its beauty portfolio, marking the company's first acquisition as an independent entity after it was spun off from former parent Coty in 2020.
The acquisition of Briogeo comes more than 12 months after former parent company Coty spun off the Wella business, in a deal that saw private investment firm KKR acquire the hair care and beauty brand - Briogeo
While financial details of the takeover deal were not disclosed, the owner of Wella Professionals, O.P.I, GHD, Nioxin, Sebastian Professional and Clairol announced it has reached a definitive agreement to acquire Briogeo, "one of the fastest growing hair care brands in the world and one of the largest independent Black-owned brands in the United States," according to a press release.
Wella said it intends to support Briogeo and its strategy to excel at the forefront of sustainable beauty, adding that the hair care brand aligns with Wella's commitment to building a company with Diversity, Equity, and Inclusion (DEI) and Environmental, Social and Governance (ESG) at its core.
"Briogeo has been at the forefront of the clean and natural hair revolution since the company started in 2013, and its rise has been nothing short of remarkable. Together we'll extend our sustainable product offerings even more, expand our premium retail footprint and drive both commercial and social impact to new levels," said Annie Young-Scrivner, chief executive officer of Wella Company.
The addition of the Briogeo portfolio also reinforces Wella's ambitions to retail more diverse products for all hair types, while expanding clean and green products across its portfolio offerings.
"Briogeo's high-growth, eco-ethical and natural hair care products complement our existing hair portfolio and sustainable offerings and will fuel our growth momentum in the hair category, which is now the fastest growing segment in beauty," added Young-Scrivner.
Founded nine years ago by Nancy Twine, who also stands as the company CEO, Briogeo offers clean and natural hair care, offering products and solutions for every hair type, hair texture, hair need, ethnicity, background and person.
"The strength of Wella Company's research & development, digital marketing and global operations, and their ability to reach 91 million hair and nail professionals and followers they serve and support will take our Briogeo brand to the next level," said Twine.
"This is a significant strategic partnership for both sides, and one that is compatible in ambition, philosophy and culture. In Wella Company we have a committed partner to help our business and our employees reach the next level of growth. We're excited to accelerate our expansion and innovation, globally delighting more people in more geographies and through broader delivery channels."
The acquisition of Briogeo comes more than 12 months after former parent company Coty spun off the Wella business, in a deal that saw private investment firm KKR acquire the hair care and beauty brand.