Weather is just the final straw
IT isn’t just the snow that has stymied Alexon.
True, the combination of closed stores and customers staying at home has been an immediate issue. But for too long Alexon’s clothes haven’t been the indispensable buy needed to haul shoppers in during the recession.
It has also been crippled by millions of pounds of lease commitments on shops that have closed or have been losing money. The past two years are a litany of falling sales and margins that only stabilised in the four months to November.
This underlying weakness is what extra pressures such as the current snow exposes.
Though its interim sales tiptoed into the black at 0.4 per cent growth, it will lose far more than that – after all, the big freeze at the start of the year saw Alexon’s interim sales fall 14.3 per cent year-on-year.
It is still to feel the benefits of a turnaround strategy that has seen new design teams hired, new clothing collections launched and £20m capital raised to pay off the leases.
But these lost sales alone have the potential to strip £1.5m from its full-year profit forecast – half the £3m hoped for.
That’s a massive impact from a short period of time and a sign that until Alexon can show sustained strong sales, it is out in the Arctic in investors’ terms.