Solid start to strong rebound

As we pile ever harder into the season of goodwill to all men other than those who sold you a slice of Steinhoff last week, there are certain festive traditions that must be upheld.

Retailers will be bombarding you like the Allies over Dresden; you will reacquaint yourself with the early works of Mariah Carey; Slade’s lone masterpiece, “Love, Actually” will be on constant loop; and you will find a Cinderella story of triumph over adversity lurking in the nether regions of the small-cap universe — take a bow, Ellies.

The share has taken a mighty pounding over the past few years, tumbling from a high of about R10 in 2013 to a mere 15c earlier this year. But any canny bottom-pickers who piled in at that level will be pleased to see that it’s now rebounded to a slightly healthier 40c.

Key to the group’s recovery has been to bid a none-too-fond farewell to its woeful dabble in infrastructure, and it is now back to fine-tuning its consumer operation.

Despite the decidedly tepid state of the local economy and a consequent squeeze on disposable income, Ellies has managed to grow turnover and gross profit margin while taking a mighty chunk out of the cost base. The brand remains strong, its satellite operations have exceeded expectations, and the company is making further inroads into the energy sector.

There remains plenty of heavy lifting to be done before Ellies can declare its recovery complete, but the group has made a solid start and shareholders will be hoping for more of the same.

In keeping with festive tradition, you’ll find a Cinderella story of triumph over adversity lurking in the nether regions of the small-cap universe