Cosmetics specialist Body Shop has cleaned up its act by posting surprisingly buoyant sales and profits figures.
The company, which restored fortunes with a "Made with Passion" logo, was rewarded with a 14 per cent rise in its share price as it posted strong sales for the last nine weeks, including a nine per cent same-store rise in the UK.
It also pledged to expand into new regions and make further inroads on a recently announced £ 100 million project to open more stores and refurbish others.
Body Shop profits were up 21 per cent on a year earlier to £34.5 million, with the company confident of operating profits growth of 15-20 per cent in the current financial year.
However, the group warned that earnings growth would be slower as global issues impacted on trading.
"Retailers around the world are facing a more challenging trading environment, as consumer spending patterns soften, energy prices rise, the US dollar continues to be weak and store occupancy costs come under increasing pressure in certain markets.
"Additionally, there are two significant factors impacting our profitability: our continuing exposure to movements in the US dollar exchange rate, and a higher effective taxation rate which will rise towards normal UK corporate tax rates as the benefits from brought forward operating losses in the US business are fully utilised," the company said.
Body Shop said progress in the UK and Ireland had been "particularly significant" with store sales down just one per cent in the period covering the 12 months to February 26 2005, compared to the previous year. Last year the company issued a profit warning citing UK sales as a "concern".
However, new product launches, a strong Christmas gift range and improved customer services were, according to management, responsible for the improvement, lifting operating profits from the division up by 17 per cent to £11.7 million.
The company's three other operating divisions also managed growth with overall sales up five per cent to £708.7 million in the year.
Asia Pacific produced the strongest performance as double-digit gains in South East Asia, Hong Kong and Taiwan helped lift sales by 12 per cent and operating profits to £19.7 million.
"Given the current dark consumer feel, this is an exceptional performance," said Oriel Securities' Eithne O'Leary. "Buy," she said.
Meanwhile, house broker ABN Amro reiterated its 'buy' recommendation, noting that just the lower end of Body Shop's guidance lifts its current year pretax profit forecast to about £44.6 million from £41.6 million.
Body Shop said it would build on the group-wide performance through the £ 100 million investment, including through new openings and refurbishments.
The company is also planning entry into new markets such as Russia and China while it will develop complementary sales channels, which have recently involved the successful launch of Body Shop at Home parties.