After the roller-coaster that is HMV (mostly a roller-coaster in the downward direction), I am more suspicious of retail stocks. Jacques Vert (LON:JQV) might just restore the faith and put the fun back into the fair ground. JQV is a retailer of four womenswear brands, aimed at the middle-aged to older lady (aged 30+), sold through its own stores, department stores and the internet.

The current share price of 16.75p (mid-point as at 11 February) gives the company a market value of £32m. Based upon the 2010 basic EPS of 2.5p, this represents a PER of 6.7x. The Company is listed on AIM. In the past five years, the shares have hit a high of 26.5p (April 2007) and a low of 3.25p (Dec 2008).

Background

The Company was founded in 1972 by two tailors and listed on the stock market in 1977 with the Jacques Vert brand.  In December 2002, the Company acquired William Baird Plc, which came with three further brands and a garment manufacturer in Sri Lanka for £18m.  In late 2010, the Company started to develop its online presence with the launch of two multi-brand sites.  The four brands are now retailed in c900 outlets, including a small presence in Canada and Ireland.

Risks & Challenges
Fashion-led retail, although geared towards older women, which as a group tends to have more disposable income and favourable demographics; Currency risk / overseas suppliers - there appears to be a hedging strategy in place, but currency movements will have an impact; There is small pension scheme deficit on the balance sheet (£0.65m) and An upgrade to the IT infrastucture to support online growth has been announced - budgeted at £3m - but brings with it the risks of not being implemented to time or cost. The Company website is here 

The Rules

The following analysis is based on the 12 months to 24 April 2010 (FY10) unless otherwise stated

1 - Assets - the NAV at the April 10 was £23m compared to a market cap of £32m, equating to a premium of 39%. On the face of it, the balance sheet looks healthy with limited goodwill, lots of cash (£12m) and positive net current assets.  

However, when you probe the notes…

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