Oy-vey! From Tackle & Guns Magazine- re: Angling Direct

[Jeff Woodhouse]

Angling Direct - Big Trouble or Little Blip?
As widely anticipated by the trade, Angling Direct has announced a LOSS in its pre-close trading update for the year. Shares are down nearly 10% today.
In a carefully worded statement posted today on the stock exchange, AD says:
"The Company expects to report revenue for the financial period of £53.1 million, an increase of 26.5% compared with the same period the previous year (2019: £42.0 million). The Company continued to grow sales both in-store and online. In-store sales were £27.9 million, an increase of 41.3% on the prior year period and up 12.0% on a like-for-like basis. Angling Direct added 10 new stores during the period, including two acquisitions, taking the total number of stores to 34. The Company is pleased with the performance of the new stores, although the legacy stock that came with the acquired stores did contribute to margins being lower than the levels to which the Board aspires. This stock has been mainly cleared and other actions have been taken to ensure that the Company returns to expected margin levels in the new financial year and beyond.
Online sales grew to £25.2 million, an increase of 13.3% on the prior year period, through continued development of the Company’s e-commerce platform. In recent months, the Company has focused on international territories that deliver both strong sales growth and the necessary level of profitability. Angling Direct’s German, French and Netherlands websites, which make up the Group’s core European markets, increased sales by 24.6%, 70.9% and 86.7% respectively, with these three territories now representing 42% of total international sales (2019: 31%). Total international sales increased by 7.6% to £5.0 million, accounting for 19.9% of total online sales during the year (2019: 20.9%).
Notwithstanding the strong growth the Company has delivered this year, a disappointing trading period, post-Christmas, influenced by exceptional winter flooding, has impacted profits. The lower levels of fishing activity meant that the higher margin, consumable products, were hit disproportionally. In addition, a more prudent approach has been taken to some legacy costs, which, taken together, lead the Company to believe that it will deliver a pre-IFRS 16, EBITDA loss of no more than £0.5 million. The Company continues to have a strong balance sheet and held cash of £5.9 million at the 31 January 2020."

 

[mikench]

Good old EBITDA,; it makes the off side rule look simple.

 

[sam vimes]

I don't suppose that their store acquisitions and expansions do a great deal to help their balance sheet, at least in the short term. I was a little surprised that they kept up such expansion into 2019/20. I'm not entirely convinced that the attempted geographical domination of the tackle market is actually helping their profitability. I suspect that seeing their local shop bought out, or shut down, actually pushes some customers to outlets other than AD. I think that people are quite put off by what appears to be an aggressively avaricious attitude.

 

[Aknib]

That has to be the spin of the century, basically all sectors up and doing well.

Only problem...

They're running a loss!

You can bang on about increases until the cows come home but if you're not making any money then you may as well talk to the cows.

I would be very concerned if I were an investor, if the company has increased sales that much and still can't make a profit, what will it take?

Ok, exceptional costs and all that but even so.

 

[sam vimes]

Eric's alone reputedly cost AD £1.1 million in cash.

 

[nottskev]

I think that people are quite put off by what appears to be an aggressively avaricious attitude.

That. And the soulless supermarket atmosphere, the stuff they stock ( and the stuff they don't) ......

 

[Jeff Woodhouse]

Why I prefixed the title with 'Oy-vey'. One of the old Jewish sentiments "Oy-vey, what a business! The only thing is, we're losing money!"

Perhaps Sam is right, the acquisitions have to be paid back first. Their website rattles me at times. You see sales and clearance items and something interests you with a low starting price. When you view the item the model that attracted you is sold out and only the dearer (normal price) versions are now left.

I do still use them, but not as much as I used to because I already have far too much stuff. I know this because my wife keeps telling me so. I can only use one rod at at time or as Peter Stone once told me "Once I have learned to master one rod I might then use two."

 

[rich66]

Oy-vey! From Tackle & Guns Magazine- re: Angling Direct

EBITDA that word seems to haunt me ! Typical retail really by the looks of things. The purchases they made will have taken a good chunk of profits, saves them paying tax I suppose.
Poor weather has hit us all.
My place had a massive spurt of growth 5 years ago or so, buying/renting totally unsuitable premises. Too big or wrong location typical really of the firm. But failed to invest properly in the infrastructure to supply the new stores now we are paying for it big time.

 

[markcw]

Re: Oy-vey! From Tackle & Guns Magazine- re: Angling Direct

I am surprised they opened up in Warrington last weekend, Ok there is only one tackle shop in Warrington and a Go Outdoors, but there are two AD within a 25 minute drive away, One at Hindley and the one @Mikench and I think @Wethrough use at Wilmslow,.The stock in Hindley before they acquired it was not upto much, I cant comment on Wilmslow
I would have thought a better area would have been the other side of Widnes around south Liverpool area,I dont think there is one around there.
I know quite a few who went to the opening of AD in Warrington, they were not impressed, a lot of shelves that should have had terminal tackle and hooklengths etc were empty, This is a brand new store not an acquisition,so they had a blank canvas to start with. The general consensus of the people I spoke to is that they will stick with Baileys the local shop for the basics of what they need and what he can order in for them, and use Hindley AD or Leigh Tackle and Bait, who will price match AD and sometimes beat their price, for larger items if needed that Baileys do not stock or cant order in.

 

[terry m]

Re: Oy-vey! From Tackle & Guns Magazine- re: Angling Direct

I have no particular view on atmosphere or whether AD should run a shop in town A or B, but it is quite normal to post losses during an acquisitive period, especially if those acquisitions are funded through free cash flow rather than loans. If I were an investor I would be more concerned about the mid to long term strategy, rather than the short term balance sheet.

 

[mikench]

Re: Oy-vey! From Tackle & Guns Magazine- re: Angling Direct

Dependent on the precise terms of each share sale agreement for the shops acquired, there may be earn out clauses, write off provisions and similar which may have to be invoked within a limited period. Losses are normal and some may even be clawed back.

My nearest AD has hardly changed save for more staff and new displays. All the old staff remain so I see little difference and it's rarely soulless .