Shares in women's fashion chain Bonmarché (BON) began trading on the Alternative Investment Market (Aim) today priced at 200p, offering investors a chance to gain exposure to this niche corner of the retail sector.
The placing of 20m shares raised £40m for Bonmarchés private equity owners, Sun European Partners, and on admission there will be just over 50m shares in issue, giving the company a market cap of £100m and implying a free float of 40 per cent, with Sun European retaining a 52 per cent stake in the business.
The move comes less than two years after the retailer, which caters to the over-50s market, was bought out of administration by Sun European after its parent company, Peacocks, went bust. Since then, management has been overhauling the business and slashed costs, which included the closure of several underperforming stores and renegotiating expensive shop leases. The group had over £10m of net cash at the end of September and seems to have had a good first half of the year, reporting comparable sales growth of 12.7 per cent and an 80 per cent rise in underlying cash profit in the six months to 28 September. Retail analyst Nick Bubb reckons the business looks to be heading for sales of £165m for the year to March 2014 - a 14 per cent rise on last year - and cash profit of roughly £14m, which he says should enable a decent pro-forma dividend payment.
Bonmarché sells its products through a network of 265 stores across the UK, mail order catalogues, a telephone order service, a TV shopping channel and online. It has a large customer database of some 6.5m members, of which 1.8m are ‘active’, meaning they've shopped in the past 12 months. The growth strategy includes improving the product range, store refurbishments, improving customer service, expanding multi-channel and online - online sales grew by 120 per cent in the first half of the year, but still accounted for just 5.1 per cent of the total - and tapping into alternative markets, such as garden centres, cruise ships and residential care homes. Management claims the company is also well placed to benefit from the burgeoning over-50s demographic in the UK and the rising popularity of 'value' retailers.
VITAL STATISTICS
■ Issue price: 200 pence
■ Number of sale shares being sold on behalf of the selling shareholder: 20,007,260
■ Ordinary Shares in issue on admission: 50,018,150
■ Market capitalisation of the company at the placing price: £100m
■ Percentage of ordinary share capital being placed on admission: 40%
