Theo Fennell

With its turnaround strategy now starting to pay off, fine jewellery designer and retailer Theo Fennell looks set fair for a return to profit.

Half-year results to September from the global luxury jeweller showed turnover up 12.5% to £4.87m, with losses pared from £1.075m to £877,330, even after significant recent investment in the business. Theo Fennell raised £1.5m at 38p in April, funds it then employed to accelerate its development, refurbishing its Fulham Road and City stores, developing a new website with an online store and launching a new low-priced silver jewellery collection known as ALIAS at the end of October.

These efforts, says the board, should stimulate sales in the second half, which includes the key Christmas selling period. New collections, developed under the direction of eponymous founder, significant shareholder and creative director Theo Fennell, for which hopes are high, include the Bee collection, launched in June and recently expanded with butterfly and dragonfly motifs.

Developing its presence in the growth markets of the Far and Middle East among others, analysts see Theo Fennell swinging from losses to pre-tax profits of £500,000 for the year to next-March, as turnover improves to £15.7m (2010: £12.6m), generating earnings of 2.1p.

Based on these estimates, the shares, north of 150p during the 2007 bull market and now a lowly 40.5p, still sell on a rather punchy 19.3 times earnings. Nevertheless, so long as recent investment bears fruit, Theo Fennell’s financials should regain some of their sparkle and the shares are worth a speculation.