Companies: JQV   

First, a word on the market. I remain very cautious. On balance, I expect world equity markets to probe further lows over the summer as a mix of concerns over interest rates, inflation and currency turmoil override what remains a generally positive trend in corporate earnings. In the short run, the key factor is technical. What marks this pullback apart from the slump in 2000/1 is the number of funds and individuals now playing spread bets and other geared derivative strategies on margin (or through debt funding). A lot of money is now being taken off the table – either voluntarily or through margin calls that cannot be met. That is going to go on happening for a while – and it will cut rallies dead in their tracks.

There will of course still be shares that go up and my job is to find some of them. This week, it is one of the troubled names of the rag trade that catches the eye – Jacques Vert. Currently 13.75p (spread: 13.5p – 14p), Jacques Vert is about a month away from announcing results for the year to end-April. With the figures, I expect to hear some positive news regarding surplus properties that have resulted from the integration of William Baird, which the company bought in late 2002, and the shift of product sourcing to third parties in the Far East. That should be positive for the shares.

Jacques Vert comprises a retail division selling womenswear under the Jacques Vert, Windsmoor, Planet and Precis brands, a wholesale division selling menswear under the Melka brand and an outdoor clothing brand, Tenson. The business lifted interim profits by 30 per cent to £1.3 million as a turnaround in the wholesale operations, cutbacks in stock levels, and the closure of in-house manufacturing operations pushed up margins. The second half started well but the important months of March and April were poor, according to the company’s pre-close trading update.

However, the update also made it clear that asbestosis claims inherited from the Baird acquisition – an issue of some concern – were coming to an end. The amount guaranteed by Baird was capped and the claims total was fast approaching that cap. Cash has been mounting up as the sums invested in ‘dead’ stock come down. At the end of October last year, Jacques Vert had net cash of £2.1 million. That compared with net debt at the same stage the previous year of £1.9 million.

With a market capitalisation of £26 million, it will not take much in the way of good news on the property front to put the shares better.

Jacques Vert	AIM	£7.93m	4.12p	-0.25p
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Other company articles:
Jacques Vert			08/05/2008
Jacques Vert clean-up complete			12/01/2007
Jacques Vert directors buy more			25/08/2006
Jacques Vert up on Baird pension deal			07/07/2006
Jacques Vert to defy the bears			09/06/2006