ProCook sees FY revenue slightly ahead of market views after record peak season

(Sharecast News) - Kitchenware retailer ProCook said on Wednesday that it was on track to deliver a strong full-year performance, with revenue and cash generation set to be slightly ahead of market expectations, as it reported "record" peak season trading. In the 12 weeks to 4 January, total revenue rose 28% to £32.8m, with like-for-like revenue up 17.2%.

Retail revenue increased 26.8% to £20.3m, benefitting from the tenth consecutive quarter of LFL growth - 9.1% - and the impact of new store openings. Revenues in the e-commerce segment jumped 30% to £12.5m, with LFL growth of 28.9%, driven by "significant" growth in both traffic and average order values.

ProCook said it outperformed the UK kitchenware market including kitchen electricals by about 30 percentage points.

The retailer also said it was on course to deliver a strong full-year performance, with revenue and cash generation seen slightly ahead of market expectations. Operating profit and pre-tax profit, excluding FX impacts, are set to be in line with market expectations following investment to drive acceleration in market share gains.

Chief executive Lee Tappenden said: "These results reflect strong execution of our strategy and the outstanding customer focus and commitment demonstrated by our colleagues.

"Continued disciplined investment is supporting our results, enabling us to significantly outperform the market and capture increased share, with our active customer base growing to new heights driven by record new customer acquisition as more customers discover our brand for the first time and enjoy our award-winning quality products and excellent-rated service.

"These results, together with our expanding retail footprint and our enhanced product offering which is clearly resonating with consumers, mean we are confident in delivering a strong full year performance. We are firmly on track to achieve our medium-term ambition of 100 UK retail stores, £100m revenue and 10% operating profit margin."

At 1204 GMT, the shares were up 3.7% at 40.11p, having hit as high as 45p earlier in the session.

Broker Peel Hunt reiterated its 'buy' rating and 50p price target on the shares after the update.

"Trading did not miss a beat through Black Friday and Christmas, and excess seasonal stock has sold through well as January carried on the good work. This is an exceptional performance, in our view, and a country mile ahead of the market which management believes was down by about 2% in the period," it said.

"The outperformance comes from both strategic/fundamental and tactical angles: ProCook has a strong value proposition and a compelling product range, and now management has added improved merchandising techniques and a greater appetite to increase customer acquisition spend.

"New stores are being fitted out with a new plan behind them and the results are pleasing both to the eye and the till. The new small electricals ranges are being well received by customers."

Analysts Jonathan Pritchard and John Stevenson added: "With cash on the balance sheet, there are many reasons to be impressed by ProCook, in our view, but the multiple is hardly wide, especially if we look at the company on a recovered margin basis.

"We believe LFL of 17% in troubled markets is a very good effort and whilst we do not expect that to persist, continued sales and profit density growth should, and that will drive a rerating. The shares are highly attractive in our opinion."