Profits and dividend up, share price down.
The most attractive retail share I can think of right now is N Brown Group (LSE: BWNG).
With its full-year results, the FTSE 250 home-shopping specialist has just announced a 5% increase in revenue, a 7% uplift in adjusted earnings per share, a 5% hike in its dividend and a positive outlook.
Yet, despite its collection of indicators that all seem to be heading in the right direction, the shares have fallen around 19% to about 235p since this time last year. That means you can pick them up on a forward yield of around 6%, twice covered by expected earnings in 2013.
The inside story
The thing I most like about Brown's story is the sound progress in penetrating the internet market. E-commerce sales have increased by 16% to £377m over the year to make that market around 50% of total sales.
Traditionally, Brown has generated sales of its clothing and footwear lines through catalogue sales. I think the future of home shopping is online, and it seems likely that next year's results will show further progress in that arena.
The company is also making tentative progress expanding overseas with a small presence in Germany, and fast-paced growth from the US, where it sees a big opportunity. This year US sales increased 500% to around £5m.
Record of growth
Brown has traded well through the recession, and investors have seen the dividend increase by around 44% over four years. Cash backed growth in revenues and profits have supported that progression.
|Net Profit (£m)||56||62||63||72||81|
|Net cash from operations (£m)||32||39||92||57||57|
Will this growth continue? The CEO thinks so, saying that, despite tough trading in 2011 -- which he expects to continue -- the company's focused strategic plan positions the group for further progress during the current year.
It's not easy for retailers just now, but with debt under control at around 60% of net asset value, a trailing dividend payment covered about twice by free cash flow and a solid record of trading, Brown looks well positioned to benefit as consumer finances recover.
At the recent share price of 235p, the shares can be picked up on a trailing earnings multiple of about eight. If nothing else, they're worth considering for that fat dividend, which looks very attractive to me.
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> Kevin owns shares in N. Brown Group.