Walker Greenbank’s pre-close trading update confirms the group is on course to deliver further sound progress in the current year. The strong share price performance since the prelims in April (+ c 23%) demonstrates that the market is recognising the consistent trading performance over a number of years and the investment to continue growth into the future.
H1 brand sales are indicated to be 8.4% ahead of the corresponding period last year. While this is slightly below the rate of progress reported at the AGM, it is comfortably ahead of our 5% full year revenue growth target. While progress is being delivered both at home and in export markets, there continues to be a faster overseas momentum, with the recently upgraded New York showroom contributing to a particularly strong performance in the US. The group’s specialist manufacturing businesses are performing well, boosted by investment extending their digital printing capacity. We look for underlying pre-tax profits of £3.5/3.6m (£3.28m), demonstrating the group is comfortably on course to meet our full year estimate.
Walker Greenbank continues to reap the rewards of its consistent investment strategy. The group has introduced numerous new collections, including the introduction of three new brands in recent years; it has simultaneously invested in new IT platforms, warehousing facilities and broadened the printing capabilities of its manufacturing operations to support the innovative ambitions of its design teams. Walker Greenbank has consistently gained market share, both at home and overseas, over several years – this momentum shows every sign of continuing.
Seasonal factors (stock building ahead of the autumn selling season) suggest a cash outflow of up to £1.0m during the first half. However, we remain optimistic that our estimate of net funds of £1.5m at January 2016 will prove conservative.
Walker Greenbank's shares have risen by c 23% since our report published in midApril; while Colefax shares have performed well, the peer group shows an average gain over the same period of just 2%. The group’s recent trading performances and potential have earned it a prospective rating some 35% above that of smaller global consumer groups and in line with larger groups.