Marchpole: 40m Forward Orders, Global Network in Place

Investors Chronicle 24 November:

Marchpole, THE designer and licenser of eight fashion brands, reported a steep rise in both sales and profitability. This was driven, in part, by a good final season from Yves Saint Laurent, which will no longer sell popular retail lines (known in industry jargon as 'diffusion collections'). But the company also benefited from the acquisition of 51 per cent of luxury brand Homebody in August 2006. In addition, Marchpole's relationship with the House of Ungaro was strengthened, and this resulted in increased turnover.

Executive deputy chairman Michael Morris also points out that Marchpole benefited from reducing overheads in the US, UK, France and Italy. As a result, the gross margin improved by a stunning 17 percentage points in the US - reflecting improved sourcing for brand Moda America.

House broker Shore Capital therefore forecasts full-year, adjusted pre-tax profits of GBP8.1m (from GBP4m in 2006), giving adjusted EPS of 19.97p (9.95p), falling to GBP6.5m and 16.06p, respectively, in 2008.

Marchpole is making positive steps towards replacing its sizeable Yves Saint Laurent business. So, trading on just 7 times 2008's forecast adjusted earnings, the shares rate good value.