Fast fashion retailer Missguided has posted an operating loss in its latest financial results, citing “significantly too large” store sizes as part of the problem.
The multichannel retailer reported an operating loss of £44.8m in the 53 weeks to 1 April 2018, compared with profit of £1.5m in the previous year.
Underlying trading loss before depreciation and interest during the period was £26.5m. However, turnover increased by 4.9% to £215m.
Missguided said its physical stores – a 20,000 sq ft unit at Westfield Stratford and a 16,000 sq ft shop at Bluewater – did not generate sufficient revenue to cover their operating costs since they were “significantly too large”.
It subsequently recognised an onerous lease provision of £5.1m during the year, as well as an impairment of store-based assets totalling £4.5m.
The retailer also cited recent senior management appointments as “premature” investments that affected its performance.
A full strategy review was conducted in early 2018, which “identified a set of corrective actions” implemented at a cost of £7.2m.
Commenting on the results, Emily Salter, retail analyst at GlobalData, said: “Missguided’s move to open stores was initially seen as an opportunity to increase brand awareness in the crowded fast-fashion market with its unique store environment clearly targeting its 16-24-year-old customers.
“However, the two stores in Bluewater and Westfield Stratford have proved costly and too large for the products stocked. The retailer’s previous plan to open a further 28 stores has been abandoned, indicating the challenges faced by multichannel retailers as footfall decreases in shopping destinations and young consumers in particular increasingly choose to shop online.”
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