Women's value retailer Bonmarche (BON:AIM) is full of bounce on Friday as it posts solid annual numbers and a confident outlook. Having traded successfully through recent tough market conditions, the fashion purveyor is increasingly eyeing new growth markets in a structurally-growing niche.
Delivered against a challenging market backdrop, annual numbers to March speak to the resilience of the Yorkshire-based business, one of Shares fifteen picks for 2015. Taxable profits grew 10.4% to £12.4 million and the retailer delivered top-line progress too – good going in a year of two distinct industry halves. Investors jumped at this welcome good news, bidding the shares 6.5% higher to 287.5p.
Near-perfect summer weather drove strong first half sales. Jersey tops, cropped trousers and swimwear flew off Bonmarche's shelves. However Bonmarche then felt the pain of mild autumn weather, sapping demand for coats and knitwear across the apparel industry and forcing retailers to discount product to the detriment of margins. Yet the Aim counter still managed to deliver a profits uplift, in part by leaning on its Bonus Club loyalty scheme and by bearing down on cost.
Guided by CEO Beth Butterwick, Bonmarche focuses on selling stylish and affordable clothing for women over 50 years old while also paying attention to the bulging 'plus-size' customer demographic. As such, the company is geared into structural population change and pensions reform. The over-50s niche is a growing and resilient segment, since women of a certain age still want to look fashionable and tend to have greater disposable income than youthful peers.
Bonmarche, selling its wares in bricks-and-mortar stores and the web, as well as via its own mail order catalogues and the Ideal World TV shopping channel, is successfully mining this rich seam. Its share of the UK women's value clothing market grew 12.8% to 4.4% last year, according to market research firm Kantar Worldpanel.
Unsurprisingly, the shop, Investec Securities, argues Bonmarche has numerous profit opportunities to go after. 'We continue to see multiple material growth opportunities such as further range, operational and online improvements,' writes retail scribe Kate Calvert, also highlighting growth to come from new store openings and concessions. Self-help opportunity, in the form of supplier consolidation and product range development, including the Anne Harvey brand and David Emanuel label and a fledgling menswear trial, is a big plus for Bonmarche too.