THE INVESTMENT COLUMN: Refurbishment pays at Allders

The City is warming to Allders, the department store group which sold its duty-free business last year. Now a simpler company with which the City feels more comfortable, Allders shares have performed strongly since January, when it turned in one of the season's best Christmas trading statements.

Having started the year close to their all-time low of 172p they rose another 11p to 215p yesterday following the first clean set of results since the duty-free sale to SwissAir last summer. Though the shares are still some way adrift of the 300p they reached two years ago, prospects are looking brighter.

Profits for the six months to 31 March were doubled at pounds 16m and like- for-like sales were a healthy 13.3 per cent up. In current trading, same- store sales in the first seven weeks of the second half are 7.2 per cent ahead of this period last year.

Allders is benefiting from the improvement in consumer confidence. But it is faring better than most due to its exposure to the consumer durables markets. Like-for-like sales are 30 per cent up in furnishings and more than 20 per cent ahead in electricals.

Management action has also helped and the relaunched Allders account card now has 250,000 members compared with just 90,000 last year.

With pounds 17m in cash and a strong sales picture across most product sectors, Allders looks in a good position. On full-year forecasts of pounds 18.6m the shares trade on a forward rating of less than 13. This is a discount of more than 20 per cent to the sector. Good value.