|Bonmarche Holdings - Preliminary Results|
RNS Number : 5217J
Bonmarche Holdings PLC
Bonmarché Holdings plc
("Bonmarché" or the "Company" or the "Group")
Bonmarché, one of the UK's largest women's value retailers, reports its preliminary results for the year ended
· Revenue up 11.9% at
· LFL sales growth of 10.4%
· EBITDA (before exceptional items) up 50.6% at
· Profit before tax up 66.1% at
· Pre-exceptional PBT up 85.3% at
· Profit before tax margin up 1.6% at 4.9% (2013: 3.3%)
· Pre-exceptional PBT margin up 2.7% at 6.8% (2013: 4.1%)
· Post-exceptional adjusted earnings per share up 52.1% at 11.1p (2013: 7.3p)*
· Recommend final dividend of
· Market share of women's value sector increased by 14% from 2.8% to 3.2%
· Good progress delivered against strategic objectives:
o Successful product and price enhancements
o Increased online penetration with sales up 84%
o Improved store estate: new refit concepts trialled in select existing stores, two successful relocations and exit from 1 non-strategic store
o Improved customer service
o Successful garden centre trials and established roll-out plan for FY15
"I am pleased with the strong financial performance in the period since the IPO. FY14 was the first full year of implementing our new Business Plan and we have made good progress in each of our key strategic areas: product, multi-channel, stores and our service proposition.
"We are confident that the successful execution of our forward growth strategy, combined with our established position as one of the largest pure-play value retailers dedicated to women over 50, will enable us to continue building on our appeal and accessibility to these customers and, in turn, deliver value for our shareholders."
For further information regarding Bonmarché, please call:
Notes to Editors:
Bonmarché is one of the UK's largest women's value retailers, focused on selling stylish, affordable, premium quality clothing and accessories in a wide range of sizes for women over 50 years old, via its own store portfolio, website, mail order catalogues and through the Ideal World TV shopping channel. Established in 1982, Bonmarché has more than 30 years of experience in this growing market segment, operating across the
This announcement contains certain forward-looking statements regarding future occurrences and the prospects of the business. These forward-looking statements reflect the Directors' current beliefs or expectations and are based on information available to them at the time of the announcement. Any such forward-looking statements may be subject to various risks and uncertainties and consequently, actual results or developments could materially differ from the forward-looking statements expressed.
*The change in share capital structure in 2013 has a profound effect on the calculation of the weighted average number of shares in issue, which is used to calculate basic earnings per share. In order to allow a more meaningful comparison with previous years, we have only shown on this page post-exceptional adjusted basic earnings per share. The adjustment restates the weighted average number of shares in issue as if the total shares issued post-IPO were in issue throughout the whole year, and for the whole of FY13. Details of basic and post-exceptional adjusted earnings per share can be found in note 5 of the financial information of this statement.
I am delighted to report the Group's strong financial performance, particularly with this being the first year end as a listed company.
Despite the difficult economic conditions, we have been able to drive the business forward at a pace, and the robust results reflect the growth achieved during the financial year. Revenue for the year ended
I would like to thank each and every one of our colleagues for their hard work and commitment to Bonmarché's success during the period. The Group's focus on its customers has always been outstanding and our store, warehouse, buying and support colleagues form a fantastic team working together to delight the Bonmarché customer.
It is particularly pleasing that our efforts have been recognised by our customers, who voted Bonmarché no.1 'Clothing Retailer' and no.5 'Best High Street Shop' in the 2013 'Which' Satisfaction Survey, and no.2 in the 'Best Overall Retailer' and 'Best Clothing Retailer' categories of the 2013
The Board is committed to operating to high standards of corporate governance, as we believe that doing so will contribute to the delivery of long term shareholder value. The business applies the principles of the Quoted Companies Alliance Corporate Governance Code for small and medium quoted companies and, where practicable, elements of the UK Corporate Governance Code.
The Board is pleased to recommend a final dividend of
Whilst FY2013 was a year of recovery for the Group, FY2014 was a year of growth.
With full year revenue up 11.9% at
The collection has continued to improve significantly this year, as we react to the feedback from customers, stores and the information that the buying and merchandise teams analyse. Our first initiative, to 'build back the sales gaps' in categories such as coats, blouses and skirts was successfully implemented and during the year these departments increased sales by
On pricing, we have continued to develop our clear, 'first price, right price' stance. This initiative was welcomed by our customers, and resulted in sales growth of
Our sourcing strategy has continued to evolve and we have focussed on building fewer, more meaningful, strategic, supplier relationships. We concentrated on rationalising our supplier base, reducing our active suppliers from 170 to 119. However, we have not become too dependent on any particular supplier - our top 20 suppliers still account for 67% of all stock purchases, the same as the year before.
Our like-for-like store sales increased 10.4% year-on-year. Net store numbers fell during FY14, reflecting our exit from one non-strategic store occupied under a short term tenancy at will arrangement. However, we successfully relocated two sites,
The store sales improvements have been driven by better ranges, and a number of measures to improve the environment including: the introduction of more mannequins, window display overhauls, improvements to our fitting rooms and the introduction of 'tub chairs' to increase dwell time.
Additional colleague service initiatives we have introduced include: a trained bra advisor in every store, a 'VM Academy' to support our stores developing their mannequin dressing and display standards, and the first full year of our mystery shopper 'Customer First' Programme.
Other sales channels
In the last year, we have opened two concessions within garden centres operated by a third party. Regrettably one was forced to close due to a fire. However, we and our host partner have been very encouraged by the initial sales results of this initiative and we have now commenced a significant roll out programme for FY15.
Our multi-channel sales have grown by 84% during the financial year. The main drivers of this growth are: the full year effect of the benefits of our 2012 website re-platform, growth of our e-mail database and the recruitment of a new online digital marketing agency to increase our ability to attract new customers to our site, and the addition of new, web exclusive product lines.
We have introduced a catalogue, which is established as a powerful marketing tool to help develop the stores' interaction with customers.
Our TV shopping channel represents a small part of the total sales mix, but is a valuable and low-cost way of bringing Bonmarché to the attention of a wider audience.
During the period we have outsourced our customer call centre to a local partner with an established empathy with our customers' age profile. We have also improved our Christmas 2013 delivery promise, both by adding a 'next day' express service and by lowering our delivery charges.
We are updating our EPOS system which will, at maturity, not only improve the customer experience at the till, but provide the technology for the customer to have the ability to purchase any product, at any time, from any store, and have it delivered to home or to store. The project is underway, and will be implemented in stores through late calendar 2014 and 2015.
Customers & Market
Bonmarché operates in the value womenswear sector, with our aim being to serve well the 50+ customer. Verdict(1) data tells us that the female population in the
We are encouraged by our start to the current financial year and the Board remains positive about the outlook for the coming year. There is still much to deliver against our strategy set out in 2012, and I look forward to working with the Board and colleagues on what will be another exciting year.
To allow meaningful comparisons to be made against prior year figures, this section of the report refers to the 52 week period ending
As a convenient reference point, in the table below the results for the 15 month period have been split into the 52 week period ending
Profit before tax and exceptional items
Group profit before tax ("PBT") was
This was achieved by increasing sales, whilst broadly maintaining gross margins, with controlled investment in costs being made in certain areas, particularly in relation to multi-channel.
Total revenue grew by 11.9% from
Gross margins & operating expenses
Our strategy to develop our "first price right price" offer, and increase the mix of near-market suppliers, required a repositioning of the margin, and as a result the product gross margin declined by 0.3% compared to FY13. A larger reduction had been planned, but a very strong sales performance through the summer season meant that markdown levels were lower than expected.
Underlying operating expenses(2) grew in absolute terms by 6.8%, but reduced from 52.6% of sales in FY13 to 50.2%. The development of the multi-channel operation required an increase in marketing expenditure, and payroll costs increased as we strengthened our team, including the recruitment of
The FY13 exceptional costs related to the restructuring of the store estate which took place during the first six months of the calendar year 2012.
The pre-exceptional effective tax rate is 21.5%, which is lower than the 23.0% statutory rate, primarily due to a reduction in the deferred tax charge resulting from short term timing differences. The post exceptional tax charge of
Earnings per share and dividends
The statutory basic earnings per share for the year are
In order to compare earnings per share year-on-year and to aid future comparisons, the weighted average number of shares in issue has been restated on a pro-forma basis to reflect the post IPO share capital structure, which has significantly more shares than the pre IPO structure. The adjustment assumes the total shares issued post-IPO were in issue throughout the whole year, and the whole of FY13.
On this basis, post-exceptional adjusted basic earnings per share for FY14 were
The Board is recommending payment of the Group's first dividend as a listed entity. This will be a final dividend in respect of FY14, calculated on a pro-rata basis to reflect the proportion of the year during which the Group has been listed on the AIM market. The dividend to be proposed at the AGM on
Net cash generated from operating activities was
The Group ended the year with net cash of
Stock at the year-end was
Terminal stock levels (i.e. residual stocks from the 2013/14 Autumn/Winter season) were low, providing a good position from which to begin the new financial year.
Investment in property, plant and equipment and intangible assets totalled
(1) Copyright © 2013, Verdict, Value Clothing UK June 2013, reproduced with permission of Verdict.
(2) Underlying operating expenses are defined as cost of sales less cost of stock recognised and included in cost of sales, plus administrative expenses and distribution costs, less exceptional items.
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated balance sheet (continued)
Consolidated statement of changes in equity
Consolidated statement of cash flows
Reconciliation of net cash flow to movement in net cash
Notes to the financial statements
1 Basis of preparation
The financial information, which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, consolidated statement of cash flows and related notes, does not constitute full accounts within the meaning of s435 (1) and (2) of the Companies Act 2006. The financial information is derived from, and consistent with, the Group's financial statements for the 52 weeks ended
The Group financial statements have been prepared on the going concern basis and in accordance with International Financial Reporting Standards ('IFRS') and IFRS Interpretations Committee ('IFRIC') interpretations, as adopted by the
The preparation of the Group financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting period. Although these estimates are based on management's reasonable knowledge of the amount, event or actions, actual results may differ from those estimates.
2 Exceptional items
Items that are material either because of their size or nature, or that are non-recurring, are considered as exceptional items and are presented within the line items to which they best relate. For all periods presented, the exceptional items as detailed below have been included in cost of sales, administrative expenses and gain on bargain purchase in the income statement.
Exceptional items comprise:
b. Acquisition and restructure costs incurred on the acquisition of Bonmarche and the subsequent restructure of the store estate. Costs included legal and professional fees paid in relation to formalising lease agreements with landlords.
c. Subsequent to the acquisition of Bonmarche, the Group carried out an evaluation of the store estate which resulted in 120 store closures and related redundancy costs.
d. Management fees paid to
f. Legal and professional fees paid in relation to the IPO on
3 Operating profit
Operating profit is stated after charging:
The tax on the Group's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:
*The blended tax rate for the period ended
Factors that may affect future tax charges:
In addition to the changes in rates of corporation tax disclosed above, further changes to the
5 Earnings per share
Basic and diluted earnings per share are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of shares in issue.
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all potentially dilutive ordinary shares. The Company has one category of potentially dilutive ordinary shares, being management shares not yet vested.
The weighted average number of shares is as follows:
The directors have proposed a final dividend in respect of the 52 weeks ended
7 Cash generated from operations
8 Analysis of net cash
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