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Bonmarche:Q4 trading proved challenging


Q4 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. Tight cost control means FY15E PBT is in-line with management’s expectations. We nudge up FY15E PBT by 1.6% and maintain FY16E. Valuation remains undemanding given good momentum in the business from self-help (range developments and supply chain) as well as future growth opportunities from new space additions. Reiterate BUY.

  • Q4 trading more challenging with LFL sales inc online down -3.3% (INVe +2%), a slowdown on Q3 growth of +5.8%. Bonmarché was up against a very tough March comparable with last year’s early summer weather bringing forward sales from Q1. The slowdown was also seen online, with sales up 14.5% vs Q3 +34.9%. Bonmarché ended the year with 292 outlets versus 263 at the end of FY14 adding a net 6 solus stores and 23 concessions.
  • FY15E PBT nudged up by 1.6% to £12.4m, bringing us in-line with consensus. The Board confirmed that the full year outcome is expected to be in-line with its expectations. We have adjusted the shape of our FY15E forecasts with lower sales offset by a lower cost assumption.
  • FY16E PBT maintained, despite a tough 1H16 comparable which is likely to result in 2H weighted profit growth. This is an issue for most UK apparel retailers with pretty ideal weather in 1H15 and many highlighted an excellent sell through ratio. Bonmarché is up against a c.24% 2 year LFL comp in H1 vs +15.6% in H2. Profit momentum should benefit from ongoing range initiatives as well as new space from restarting its opening programme in FY15.
  • Valuation undemanding, trading on CY15E PE of 13.4x versus the sector average of 16x. We believe this does not reflect the momentum within the business and growth prospects from new space addition and brand extensions/additions. Reiterate BUY.

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