viewBonmarché Holdings plc

Bonmarche as expected, posts drop in profits, but maintains dividend, with current trading in-line

For the 52 weeks to April 1, the small cap group posted an underlying pretax profit of £6.3mln, down from £10.6mln a year earlier, but in line with April’s guidance

Bonmarche model
Bonmarche's womenswear store like-for-like sales fell 4.3%, but online sales rose 2.2%

Bonmarche Holdings PLC (LON:BON) shares fell this morning as it reported an, as expected, drop in full-year profits after earlier warnings, although the struggling 50-plus womenswear retailer maintained its dividend and said current trading has been in-line.

For the 52 weeks to April 1, the small cap group posted an underlying pretax profit of £6.3mln, down from £10.6mln a year earlier, but in line with April’s guidance for it “to be slightly above the mid-point” of its £5.0mln-£7.0mln guidance range.

READ: Bonmarché Holdings shares gain as it sees full year results in line with expectations

Bonmarche’s total revenue rose to £190.1mln, up from £188.0m a year earlier, with store like-for-like sales down 4.3%, but online sales up 2.2%, also as forecast in April.

The group said: “Trading since the beginning of the new financial year has been in line with the Board's expectations and the financial position of the business continues to be sound, with no net debt and a balance sheet which provides a stable platform for the future.”

The group is recommending final dividend of 4.64p per share, bringing the total payout for the year to 7.14p, unchanged from a year earlier.

In a note to clients, analysts at Cantor Fitzgerald said: “The last 18 months have been challenging for Bonmarche with profitability suffering significantly. However, the new CEO is making good progress on her turnaround strategy. Going forward the focus will be on three key themes:- simplification, modernisation and improved execution.“

They retained a ‘hold’ rating and 90p price target on Bon Marche.

Shares decline

In early morning trading, Bonmarche shares were 2.6%, or 2.5p lower at 94.0p.

Helen Connolly, Bonmarche’s chief executive said: "A combination of internal and external factors over the past year prevented us from improving at the rate we had aimed for.

“However, we believe that the business is now well positioned, with a compelling proposition and robust plan”.

She added: "As outlined previously, it is clear that the direction of travel is broadly right, albeit the effectiveness of execution needs to improve. Our update today provides further detail on the areas where we see the greatest opportunities and how we are already beginning to address these.”

Connolly took over after the fashion retailer’s previous chief executive, Beth Butterwick quit in December 2015 following a profit warning which blamed the impact of 'mild weather'.

READ: Bonmarché hit by "too hot" September as shares melt

Independent retail analyst Nick Bubb pointed out today, however, that: "Amusingly, under 'External factors', Bonmarche note that ‘Retailers are sometimes perceived to be overeager to refer to the weather as the cause of poor performance; nevertheless it does have a significant effect on our business, both positively and negatively. The weather pattern during the first half of the year provided a disincentive for consumers to shop for seasonal clothing, impacting footfall; however, the impact in the second half proved neutral, if not favourable.’

Back in September, around a quarter was wiped off the value of the discount womenswear chain after it sounded another earnings alarm after the summer was too cool and the early autumn too hot to shift its seasonal lines.

As a result, underlying sales for the second-quarter of the financial year were down 8%, as were like-for-like revenues for the first half of the firm’s financial year.

But since then, Bonmarche has issued two reassuring updates in January and April, providing a relief rally for the shares.

 -- Adds share price, analyst comment --

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