Allders finds a new focus: The Investment Column

The sale of Allders' duty-free arm has transformed the business into a focused UK department store group, financially secure but, let's face it, not the most exciting investment proposition. The group has 30 stores, mainly town centre, in locations ranging from the pretty good to the uninspiring.

If that is not true, it is certainly the market's perception, and the shares at 146p trade at less than half the level they reached briefly in May. New management won plaudits for giving most of the duty-free sale proceeds straight to shareholders, but it plainly has an uphill struggle ahead to restore confidence in its ability to cash in on the current consumer boom.

All that is at odds with full-year figures which showed a dramatic upturn in fortunes in the second half. Overall like-for-like sales growth of 7 per cent during the year was 16 per cent in the latter six months and some areas are growing even faster.

The good news looks likely to continue in the current year with sales fig-ures for the nine weeks since the year-end running 14 per cent ahead on a like-for-like basis. Allders reckons that puts it ahead of John Lewis and it is certainly an impressive rate.

Reported profits of pounds 40.4m (pounds 23.5m) were distorted by a pounds 33.2m profit on the disposal of Allders International, the duty-free business Swissair picked up for pounds 160m earlier in the year but the underlying picture is of strong growth. The final dividend of 3.7p made a basic total for the year of 6.1p, and a special payout of 46p from the duty-free proceeds brought the total to 52.1p.

On the basis of forecast profits of pounds 21m this year, and an expected 25 per cent tax charge, the shares trade on a prospective p/e ratio of 10, a stingy rating for a company with plenty of scope to grow profits at its recent Owen Owen store acquisitions and the shares are good value.