Shares in Ideal Shopping Direct, the TV shopping channel, rose 7 per cent to 165½p after full-year forecasts were upgraded on the back of an 18 per cent rise in sales in the 21 weeks to the end of May.
Group sales rose 10.5 per cent excluding the contribution from Lead The Good Life, the mail order gardening company acquired in January.
“Today’s trading statement has forced us to upgrade our top of the range numbers,” said Ben Hunt, a retail analyst at Oriel Securities who raised his forecast by 10 per cent to a pre-tax profit of £6.5m ($9.6m). “The company is benefiting from introducing several new initiatives such as re-launching the website, introducing flexi-pay to new customers and the reinstatement of supplier credit insurance also helps.”
The home shopping company, which moved out of the red in March, said it was on track to report a “substantial” profit for the first half in 2010, compared with a £900,000 trading loss in the first half last year. It will reintroduce a dividend at the interim results in September for the first time since 2008.
“In March we said we were sat on a fair amount of cash and were debating whether to make another acquisition,” said Mike Hancox, chief executive. “But there was nothing around at the right price, so we’re still sat with the cash surplus and a number of shareholders are keen to see us reinstate our dividend policy.”
Mr Hancox said the cash surplus was over £13m.
Ideal Shopping Direct is launching a rival to Pets at Home at the beginning of July. Animal Bargains will have its own website and shows on the Ideal Shopping channel, but may in time expand to its own channel, like Ideal’s Create and Craft division. The retailer has hired Chris Palmer-Smith who was a senior buyer at Pets at Home.
“It’s suitable for the profile of customer we have - the right age, purchases are made many times a year not in a single one-off transaction and it’s the sort of product that suits demonstration,” said Mr Hancox.
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