ASX-listed Breville Group Ltd (ASX: BRG) is one of the world's leading small appliance manufacturers. Breville faced a difficult first half of FY14 as a consequence of the termination of the Keurig agreement which resulted in short-term earnings headwinds. However, the future looks particularly bright for Breville as a result of its surging international business.
Breville is continuing to increase its share of the premium small appliance market in the United States, and the company has also commenced selling its premium products in the UK under the Sage brand. During the first half of FY14, Breville saw impressive sales growth in North America of 30%. Breville's current market share in North America is low, and provides large scope for a significant increase over the coming years. One of Breville's largest customers in North America, Williams-Sonoma, recently reported sales growth of greater than 10% for the quarter to 4 May 2014, which far exceeded expectations. Breville is set to be an obvious beneficiary of increasing US demand for home appliance products.
Breville has significant brand strength in its range of small electrical products that enable it to charge a substantial price premium over its competitors. Further, Breville has also stated that 30% of its North American sales are made online, this compares to the Australian division where less than 10% of sales are derived online, providing significant upside from the Australian online market.
Breville Group should experience double-digit sales growth in North America over the longer term. Breville will also likely see profit from its new Sage brand in the UK during the current financial year. I would expect to see the company deliver earnings per share growth in excess of 15% over the next five years. At the current share price, Breville is a buy.
