Women's value retailer Bonmarché will next month swagger onto Aim in the latest sign that consumer confidence is at last returning to the UK high street. Focused on selling affordable-yet-stylish clothing to women over the age of 50, the business is well placed to benefit from the fast-growing mature ladies' fashion market as well as the flourishing discount segment.


Wakefield-based Bonmarché used to be owned by fashion chain Peacocks. It was bought by Sun European Partners in early 2012 when Peacocks went into administration. Under the management of Sun, which also owns the Jacques Vert chain in the UK, a step change in profitability has been delivered and Bonmarché is now growing strongly.


Own-brand products are selling well through its portfolio of 264 stores, while Bonmarché has firmly embraced the multi-channel revolution through a combination of a website, a telephone order service, mail order catalogues and a TV shopping channel.


Current trading appears strong with like-for-like sales, a key retail sector metric, skipping 12.7% higher in the half-year to 28 September. Unencumbered with any loss-making stores, one of the high street fashion chain's chief strengths is its 'Bonus Club' customer loyalty programme boasting an impressive 6.5 million members. Bonus Club generated £58.1 million sales in the first half, over 70% of total turnover, and gives the retailer solid growth foundations.


Management, which includes former Tesco (TSCO) deputy chief executive Tim Mason as chairman and erstwhile Marks & Spencer (MKS) and Gap (GPS:NYSE) high flier Beth Butterwick as chief executive officer, sees scope to profit from market growth in the 55-plus female demographic as well as the value end of the fashion market.


In today's intention to float statement, the retailer stresses a limited number of direct competitors directly focused on a similar age group and price point. Butterwick says: 'Bonmarché is the largest pure-play retailer dedicated to the over 50's female customer, providing quality clothing at an affordable price. We are confident that our competitive position and loyal customer base means that we are well placed to capitalise on this attractive and fast growing niche of the retail sector.'


This assertion may well be correct, yet in the quoted arena Associated British Foods' (ABF) Primark chain is enjoying rapid-fire growth in the budget fashion business, while 'plus size' retailer N Brown (BWNG) caters for the more mature female demographic through its JD Williams and Marisota brands and the fuller female shape in the younger demographic through Simply Be.


While Bonmarché won't receive any proceeds from a forthcoming placing handled by broker Investec  – selling shareholder Sun European Partners will rake in those funds – the firm is expected to kick-start Aim life with a valuation of up to £130 million, a minimum 40% free float and a robust net cash position.

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Issue Date: 18 Oct 2013