Premier Farnell returns to sales growth in first quarter

Sales growth at web and technology firm Premier Farnell came in well ahead of expectations in the first quarter though margins slipped slightly.

Sales per day returned to year-on-year growth of 2.8% in the three months ended May 5th, compared with the 3.0% decline in the preceding fourth quarter. The firm said this reflected its "strategic actions to drive customer acquisition and market share and strong growth in sales of 'Raspberry Pi' and associated products".

Jefferies had expected no growth on last year in the first quarter, while the company itself had pointed to a sales increase of just 0.5% in the first six weeks, implying a strong exit rate to the third quarter, analysts said.

Raspberry Pi is a credit-card sized computer that plugs into TV and keyboards, used for spreadsheets, word-processing and video play.

Excluding sales of Raspberry Pi, sales fell by 0.6%, though this was an improvement from the 6.4% decline in the fourth quarter.

Chief Executive Officer Laurence Bain said: "We are pleased that our actions to enhance our proposition and drive sales have enabled the group to return to positive growth in the first quarter. However, current market conditions remain challenging with indicators still weak in all our global markets.

The gross margin was below the fourth quarter due to changes in the product mix, exchange rate movements and the ongoing strength of Raspberry Pi sales. Nevertheless, the firm said that it remains focused on "managing gross margin and costs in line with the market conditions to optimise financial performance".

Analysts at Jefferies said that it was a "solid start" to the year for Premier Farnell, even if gross margin was a little disappointing. The broker said that it would leave its full-year earnings estimates unchanged.

"While current market conditions remain challenging, some positive signs are emerging and, reinforced by company specific initiatives, we believe Premier Farnell is on track to achieve a second half weighted profit revival,"Jefferies said.