Bonmarche to deliver ‘solid’ profit growth

Beth Butterwick, chief executive of Bonmarche Picture Scott Merrylees SM1004/53f
Beth Butterwick, chief executive of Bonmarche Picture Scott Merrylees SM1004/53f
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BONMARCHE today revealed that it expects to achieve “solid” profit growth, despite facing tougher trading conditions in the second half of the year.

The mild autumn weather last year caused headaches for a number of major clothing retailers, who found it harder to sell their seasonal ranges.

In a trading update, the Wakefield-based value fashion chain, which focuses on the over 50s market, revealed that sales for the year ending March 28 2015 increased by 8.7 per cent.

LFL (like for like) sales increased by 4.0 per cent, and 6.0 per cent including online. For the 13 weeks ending March 28 2015, total sales grew by 0.9 per cent. LFL sales over this period declined by 4.7 per cent. The comparable figures for the fourth quarter last year were +13.5 per cent for LFL stores only, and +16.3 per cent for LFL stores, plus online sales.

In a statement, Bonmarche said: “The board is satisfied with the current year’s performance, and anticipates that the outcome will be in line with its expectations. The group’s financial position is sound, and we enter the new financial year with a strong balance sheet.”

Beth Butterwick, the chief executive of Bonmarché, said: “This has been a year of contrasts. A strong performance in the first half was supported by good summer weather, however the mild autumn created more difficult trading conditions in the second half of the year.

“Against this backdrop, we expect to report solid profit growth. During the second half of the year in particular, the loyalty of our core customers and our ability to maintain a tight control on costs have been key strengths.

“I am also pleased that through the targeted use of promotions and discounts, the terminal stock holding at the end of the year was almost as low as it was last year, despite the increase in stores. We remain focused on implementing our strategy and I look forward to providing an update on our progress when I present our preliminary results on June 12.”

Steve Alldridge, chief financial officer at Bonmarche, said that the “splendid weather” in the first half of the year had really helped Bonmarche, but the mild autumn hadn’t been such good news from a commercial perspective.

He added: “In September, October and November the weather continued to be too nice..Looking externally, the market dynamics continue to be positive,’ he said. Mr Alldridge said that some commentators believe that the Government’s pension reforms could increase the disposable income of older consumers.

He said Bonmarche was planning for Black Friday “as a specific event”, but it wouldn’t change the company’s autumn and winter trading strategy. He said Bonmarche was not poised to open more stores in Yorkshire, but it would consider opportunities if they came along. It employs the equivalent of 1,800 full time staff.

Analysts from Investec Securities said in a note: “Q4 (fourth quarter) trading proved challenging given a very tough comparable, and the knock-on effect of clearing stock after the well-documented warm autumn weather hit industry demand.”

Investec re-iterated its “buy” recommendation.

Bonmarché raised £40m from its float on AIM (the Alternative Investment Market) in late 2013.

The company hopes to cash in on Britain’s ageing population, and recovering consumer spending, by expanding its store footprint and clothing range.

The float came less than two years after it was bought out of administration by a private equity firm.

Founded in 1982, the Bonmarché business was acquired by an affiliate of Sun European Partners in January 2012 from administrators KPMG after previous owner Peacocks, saddled with £240m of debt, went into administration. Bonmarche was awarded “Britain’s Best Women’s Clothing Retailer” at the Verdict Research Awards 2012.

On March 28 this year, Bonmarche traded from 292 stores and concessions, compared with 263 in March 2014. The company currently has around 22 stores in Yorkshire.