With the eurozone problems taking centre stage, small-cap shares in Europe and the UK have been under pressure, but US small-caps have held up better. These include Conn's, which sells home appliances and consumer electronics. It has released strong sales figures, resulting in a broker upgrade. This share is the largest direct equity holding in F&C Global Smaller Companies' portfolio, which earlier this year won the prize for Best Global Growth Fund in the Investors Chronicle fund awards. Read more on this
"In our US portfolio, there was particularly strong performance from longer-term holding Conn's, which returned 149.6 per cent (over the trust's last financial year to 30 April)," said Peter Ewins, manager of F&C Global Smaller Companies. "This retailer enjoyed a rebound in sales and profitability following its 2010 rights issue and a change of management. Underperforming stores have been closed, the retail assortment improved and credit policies tightened up, and the company is now looking to expand. This is in stark contrast to the performance of much of the consumer electronics retail industry."
The company has 64 shops in Texas, Louisiana and Oklahoma and, unlike many of its competitors, provides flexible in-house credit for customers. In the past three years it has financed approximately 61 per cent of its retail sales. The company recently reported that, over the three months to 30 April, diluted earnings per share rose from $0.14 in the previous year to $0.35, while total revenues increased $8.9m or 4.6 per cent to $200.9m.
"US corporate profits have recently hit a 60-year high as a share of national income and we have seen an encouraging profit out-turn from our own US portfolio," added Mr Ewins. "With the profit performance of US stocks likely to remain dynamic compared with other parts of the world, maintaining a large exposure here seems sensible given the current mixed global outlook."
