Vimto manufacturer Nichols is poised for UK growth despite cutting its promotional strategy, according to City analyst Panmure Gordon.
Nichols' strategy of reducing UK promotional activity appears to be paying off, said Panmure Gordon
After meeting the manufacturer’s new ceo Marnie Millard, Panmure Gordon analyst Damian McNeela said: “The company’s strategy of reducing promotional activity to enhance margins appears to be paying off, which is encouraging given the tough market back-drop.”
Nichols opted to cut its UK promotional activity in order to enhance margins at the start of this year. “We believe that this strategy makes sense and understand that to date it having its desired effect,” said McNeela.
Outperforming the UK market
Nichols’ shares have risen 15% year-to-date, outperforming the wider UK market by 7%, according to Panmure Gordon.
McNeela praised Millard’s “commercial credentials” and expected the Vimto brand in the UK to benefit from her “excellent relationships” with retailers.
But the UK soft drinks market remained challenging, characterised by a constrained consumer environment, high levels of promotion and poor weather, he added.
Panmure Gordon maintained its ‘hold’ recommendation on Nichols stock and a price target 900p.
