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I would love to see them halt any new store openings, reduce their existing store numbers significantly and spend the money saved on improving their online delivery capability. The latter is already a good service but although they are telling us about big % increases in online sales, I suspect that this is from a very low base and that the numbers today are still low in absolute terms. Hopefully any new MD will have a really solid background in online (website and app) sales and distribution. Seems a pretty obvious strategy which, if we deliver on, should see the SP back over a quid.
Fewer trips is probably a better scenario ....you have to wonder if some of the stores could run on shorter opening hours to save wages...and agree rent aligned more to revenue
The debt isnt that high really......it is more the leases on the stores that are the "burden" on the debt side
With a transaction decline of 30%, you would need an increase in basket value of 43% to keep things even. The increase in basket value is probably down to people aiming to making fewer trips. Sounds like over the last 4 weeks the sales are returning to more normal levels.
" You happy with the update then, chips? "
pretty much as expected....they are managing the business as well as expected and look prepared for Christmas....
The issue going foreward is the cost base for the stores , in relation to their revenue ....given that the Government is obviously moving to reduce its burden of costs and put more back onto the companies themselves.... so... more work no doubt is going to be done to look at the cost feasability of some of the stores...and of course the leases on the stores.....the stores are going to be where they make or break on the overall profit front...
But, outside of that clear issue which is common to all retail with stores.....they are managing the situation well ..given what affect covid has had and the time and cost invested in dealing with it....
Very much depends on Christmas now..... the table which shows the performance during the period from 16 June to 20 September 2020, is an interesting read ...
Transaction decline - (30.0%)
Average basket value increase - 23.6%
You happy with the update then, chips?
" New format trials are on hold pending analysis of long-term footfall expectations in target location types"
" Like-for-like sales in the four weeks ended 20 September 2020 were up 71.6% and 9.4% from cardfactory.co.uk and gettingpersonal.co.uk, respectively."
" The task of migrating the gettingpersonal.co.uk business onto the cardfactory.co.uk platform and the integration of the two operations is progressing well and expected to be completed by early 2021."
"A mobile app is due to be launched before the end of 2020, adding convenience to the digital proposition, and a click and collect trial is underway."
" Our distribution centre consolidation plan has been largely completed, which will enable the exit from all third-party storage. "
"...the March quarter rent payment was deferred and rent is currently been paid monthly in advance rather than quarterly on the majority of our estate."
"....we successfully renegotiated our banking covenants on the existing £200m Revolving Credit Facility."
Yes, that was encouraging to read. Good to see that they will be releasing an app by the end of the year too. Shame they'll not be able to capitalise on Christmas sales with that though.
Yes a slightly disappointing read. Encouraging to hear however that store performance has been gradually improving since reopening and LFL was down only 6.9% over the 4 weeks to 20th September.
"Better than expected trading in stores since reopening, with transaction numbers continuing on an improving trend since the period end and material average basket value gains which are holding steady, with LFL down only 6.9% for the 4 weeks to 20 September 2020"
It doesn't make for great reading. But I think given the current situation, they've done incredibly well. There's nothing new in this statement in a way. It does disappoint me though that they didn't think to report the figures as a quarterly figure as we can then see clearly the impact covid had and the true extent of their recovery. Instead they chose to lump all the figures into one half.
Bob 132
They have reduced their debt, covenants agreed and met for the foreseeable future. All seemed very positive to me and just need a new cfo
May the force be with you.
All the best for us all today