21 September 2016 – trading update
A profit warning has hit shares in clothing retailer Bonmarche. Trading in September has been ‘extremely poor’, which has been blamed on unseasonably hot weather impacting on sales of the new autumn ranges. The hot weather conditions have resulted in the strong sales of residual summer stock though, which will result in an end of season summer stock holding below last year’s level, despite a generally poor summer season. Store like-for-like sales are expected to be down 8% in both the first half and second quarter. The company has lowered the profit expectation for the second half of the year and now believes that full year profit before tax is likely to fall within a range of £5.0m to £7.0m.
There are positives and a net cash balance of approximately £9m is expected at the end of the first half. An interim dividend of 2.5p per share and final dividend of 4.6p per share are pencilled in and this puts the shares on an attractive yield. New Chief Executive Helen Connolly believes growth will resume in the next full year and taking a longer term view the shares are cheap. We believe a SPECULATIVE BUY rating is appropriate.