Fading consumer boom will hold back growth, warns retail group Monsoon

Monsoon, the women's fashion retailer, reported record profits yesterday but said it was unlikely to match last year's sales growth as the UK consumer boom starts to fade.

Monsoon has seen its fortunes boosted by the launch of its Monsoon Baby range which is now in 100 branches. The group's Accessorize chain has also done well, helped by the launch of Accessorize Angels, which sells hats, scarves and other accessories to girls under 11.

These new concepts boosted full-year profits by 32 per cent to £32m for the year to 25 May on sales of £203m.

Andrew May, Monsoon's finance director, admitted that the company had seen some impact from the football World Cup, the golden jubilee and the poor June weather. Mr May added: "Falling share markets might have a bigger impact. People might feel less wealthy."

Monsoon's like-for-like sales in the year were up by 12 per cent on the previous year. This has fallen to just 1 per cent in current trading though the company said this was because it had not needed to cut prices in its summer sale as its earlier performance had been so strong. Margins are up as a result, the company said, with the summer sale also getting off to a good start last week.

Rose Foster who joined Monsoon as managing director from New Look a year ago, said Monsoon was well equipped to cope with a downturn.

Since joining she has cut 10 per cent of the group's managers and put more staff on the shop floor. She has also stripped out duplication of functions between the Monsoon and Accessorize businesses where 50 of the group's 256 stores are joint sites featuring both brands.

With costs falling £1.7m as a result, Monsoon can improve profits even if like-for-like sales improve by only 1 to 2 per cent this year. The company is forecast to achieve 3 to 4 per cent, analysts say.

The company is expanding aggressively overseas with 41 new franchise stores opened taking the total to 69. Most of the shops are Accessorize units with particular growth in Greece, Saudi Arabia and Ireland. Monsoon said it might open up to 30 new stores in Britain, and up to 75 new overseas stores.

Rhys Williams, a retail analyst at Seymour Piece, has increased his current year profit forecast for the retailer from £34m to £35m.

Another analyst said: "I think the consumer is slowing down. But if you have the products that consumers want to buy you can do better than the pack."

The company's shares closed 2p, or 1.8 per cent, lower at 109.5p yesterday. They hit 201.5p shortly after Monsoon floated in 1998 but sank to just 44p a year later after a shock fall in profits.