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AIMprospector

Bonmarché: fashion for females over fifty Retailer Bonmarché came to AIM in November 2013. The company is a high-street and online fashion retailer, focused on serving women over fifty. Bonmarché was established in 1982 and today runs over 250 stores across the UK from its Wakefield headquarters. Its plus-size clothing range and styles are targeted at older, female shoppers.

target customer is one of the fastest growing groups online The company is positioned at the confluence of three themes: an ageing population, a heavier population and longer working lives. The ‘multi-channel’ theme features heavily in the company’s communications with shareholders. Alongside straight store sales, the company also runs its ‘Bonus Club’ loyalty scheme. This has 1.8m active members. The company also sells via mail order, telephone, TV shopping and direct in care homes to customers that are unable to access shops. The company’s target customer is one of the fastest growing groups online. Bonmarché has moved to capitalise on this, with a website replatform and the appointment of a new digital marketing agency. Results for the year to March 2014 showed an 84% increase in online

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sales, to £11.6m, from total annual sales of £195m. By comparison, Debenhams makes around 15% of its sales online. This suggests that online still has some way to go at Bonmarché. The results included an impressive margin improvement and a big rise in earnings per share. The balance sheet showed £43m of total liabilities and £44m of current assets. According to market data firm Verdict, the UK’s 55+ female demographic is growing at double the rate of the female population on average. Bonmarché is positioned in a sweet-spot and is thriving like few other listed retailers.

a business that is powering ahead The most recent trading update from the company, issued at the end of July, showed a business that is powering ahead. Total sales were 16.9% higher than in the same quarter of last year. Like-for-like sales (a measure that is adjusted for store closures/openings) showed a punchy 13.4% increase. By comparison, Sports Direct (one of the high street’s most successful retailers of recent years) reported like-for-like growth of ‘just’ 10.5% last year.

Forecasts are for the company to deliver a net profit of £10.8m by 2016. While that doesn’t make the shares particularly inexpensive against today’s market capitalisation, Bonmarché is on a roll. Expectations for 2015 EPS have been rising steadily since March and analysts are forecasting much larger dividends this year and next.

Bonmarché is on a roll The US experience shows how much further the trend for plus-sized consumers could go. Demographics and the forced increase in retirement ages will further expand Bonmarché’s market. The company is well capitalised and the strong pound will help input costs. Few AIM companies can have so much in their favour. Bonmarche Holdings (LON:BON) FOR Favourable dynamics Modest valuation AGAINST High street still weak Must remain on-trend Market cap Bid:offer P/E (forecast) Yield (forecast) 52week low:high

£139m 276p:280p 14.2 2.5 212p:302p

www.aimprospector.co.uk

September 2014 AIM Prospector  
September 2014 AIM Prospector  

Featuring five AIM-quoted companies: Belvoir Lettings, Bonmarche, Cohort plc, Plus500 and Rotala.