Member Info for 42trader

New store openings - the company says it is on track to open 50 new stores this FY 01/2020, which are said to be trading well, in today's RNS. The company must be getting excellent deals on new sites, as there are so many empty shops. Generally, landlords are offering long rent-frees, and reduced rents. Plus existing sites should be seeing rent reductions on lease renewals (Shoe Zone (LON:SHOE) indicated yesterday that its rents are falling about 24% on lease renewals).

Note that the profits from new stores will be flattering overall profits - i.e. profits on the existing stores will be falling faster than the fall in company total profits.

EBITDA guidance - current year FY 01/2020 guidance is now £81-83m. What was the previous guidance? I don't know, because the statement today doesn't tell us. More time needs to be wasted to find out.

Here is the recent trend in underlying EBITDA (which is a good proxy for cashflow, with retailers);

FY 01/2018: £94.0m
FY 01/2019: £89.4m
FY 01/2020e: £81-83m

As you can see, that means the trend of falling EBITDA is now firmly established, and looks to be accelerating this year.

That said, this remains an astonishingly profitable & cash generative business, and has one of the highest operating profit margins of any retail chains.

As you can probably gather, this unsatisfactory reporting of LFL sales is really bugging me, so I'm going to have a stab at estimating the Nov/Dec 2019 sales decline, on a spreadsheet.

OK, this is what I've arrived at. It should be fairly easy to follow, what I've tried to do is work out the LFL sales change each quarter, where it hasn't been disclosed by the company. NB this is not accurate, because I haven't included seasonality of trading, in particular Dec 2019 would probably be peak trading. This is only intended to produce a ballpark LFL figure for Nov & Dec 2019, which as you can see looks pretty horrendous, with my estimate (possibly over-stating the fall), at -7.4% in cells K3 & L3 below;

Even if my figures are too pessimistic, I reckon Nov & Dec must have seen at least -5% LFLs, to have dragged down the YTD LFL performance from +0.9% (over 9 months) to -0.6% (over 11 months).

Now I can see why the company didn't want to come clean, and disclose such bad figures. But that's not good enough - they should, and must, be transparent with the market in future, whether it's good news, or bad.

If my figures are wrong, then I challenge the company & its PR people, to disclose the correct figure to the market, a figure which they have deliberately withheld so far.

I've had to waste half the morning on this, to work out estimates of key information which should have been disclosed by the company.

Share price: 109.5p (down 21% today, at 09:10)
No. shares: 341.5m
Market cap: £373.9m

(at the time of writing, I hold a long position in this share)

Trading Statement (profit warning)

Card Factory, the UK's leading specialist retailer of greeting cards, dressings and gifts, provides the following update in respect of the eleven months ended 31 December 2019.
The company's attempt to obscure the figures for Xmas trading clearly hasn't worked, along with muddled messaging on the divis, makes this a very poor announcement. Clarity is everything, and I'd certainly like to see trading updates improved at CARD.

The quarterly trading updates are good in principle - all companies should have a structured, regular approach to updating shareholders, and quarterly makes sense. Too many companies update almost randomly, whenever the AGM happens to be, then a long gap until the next interim/final results. So I like quarterly updates.

Where CARD is going wrong, is changing the format, and using confusing terminology, with too many footnotes. What it needs is just a table. Showing each quarter, the performance broken down for the quarter itself, and YTD, separately disclosing stores, online, wholesale, etc.. Keep the format of the table exactly the same each quarter, then investors can quickly see how the business is performing.

A separate table should show the EBITDA guidance, previous guidance, compared to last year, etc.

Basically, CARD (and all other retailers) just need to look at what Next (LON:NXT) does, and copy their disclosures to the market. Another, simpler example, is how Topps Tiles (LON:TPT) reports its LFL sales per quarter. CARD needs to do the same, as the current, wordy format, is confusing & is inconsistent, in particular...

Failure to disclose key sales information - the key measure that investors look for, is LFL sales performance. CARD knows this, and usually discloses it. However, for Q4 to date, the number has been withheld. Looking back, this is what was previously disclosed;

Q1 update on 5 June 2019 - LFL sales +2.3% (seems to include online sales & store sales)

Q2 update on 13 Aug 2019 - LFL sales +1.5% for the half year. Therefore, Q2 LFL must be negative, but isn't separately disclosed.

Q3 update on 14 Nov 2019 - YTD LFL sales +0.9%. This time however, the company discloses Q3 LFL openly, as being -0.4%. Fine, that's the way it should be done.

Q4/Xmas update today - YTD LFL sales -0.6%, which means Nov & Dec must have been pretty awful, to have dragged down the YTD figure from +0.9% to -0.6% in just 2 months out of 11 in total. Yet this time, the actual figure is withheld - presumably because the company doesn't want to show investors how bad Nov & Dec trading really was. This is unacceptable!

Looking back at last year's Q4/Xmas update, that didn't give LFL sales for Nov & Dec either, but the narrative did say that these were consistent with the Q3 update.

Been watching theses for 10 months now and really saw no reason to buy in.
I do think the company has done reasonably well and will continue to. The problem I see that has dropped the sp is the increase in costs, drop in FY21 EBITDA to £5m-£10m, special dividend to be dropped for FY21 and the standard dividend to be reviewed ( which means it will probably be lowered).
Overall, there is very little to look forward to in the coming 1-2 years which means the sp will likely slowly trickle down, and with the last major support broken the sp will likely drop to NAV of 65p.
Sadly, the company is fighting (and doing quite well considering) against a dying industry but investors will want to hold shares in a company where the dividend is safe and the company profits are growing yoy. This is one to wait for a turn around or a punt on a silly sp of below NAV.

Good luck those invested and sorry for the negative post.

Burford Capital has announced a number of updates on its management team, corporate governance, litigation and listing
arrangements which we believe should start to allay investor fears over the financial and operational governance of the Group.

Firstly, the Group announces that US securities class action brought against Burford in August 2019 has been withdrawn and dismissed entirely which we see as a net positive.

Burford has announced the appointment of Co-COOs in Aviva Will and David Perla, a Deputy CIO in Craig Arnott and have also appointed Mark Klein as CAO, in addition to his responsibilities as General Counsel.
These appointments mean that Burford’s Management Committee is now comprised of 8 positions which should reduce management risk.

Additionally, Chris Bogart is to be appointed to the Board and the Group is committed to disclosing compensation for Mr Bogart in its 2019 annual report in response to shareholder inquiries.
The Group has also announced that it intends to seek a US listing, alongside its current AIM market listing and will file a registration statement in April 2020. The Group will continue to use IFRS for its accounting standards but will provide statements prepared under the US PCAOB auditing standards which could provide further insight once these are filed in April.

In our view, the current valuation of c. 6x P/E includes a significant discount reflecting recent challenges to the credibility of the business, a perceived lack of visibility and challenges with some key shareholders.
With the underlying trading of the business seemingly continuing as expected, the ongoing changes to Governance should start to close Burford’s valuation discount to the market. Remain buyers.

Just bought some this morning. Looks like a bargain imo. Possible taken down today to take out stops set just below support levels.
The sp is currently sat at NAV.
P/E of 4.8
PEG 0.36
Extremely high profit margins.
Dividend.
EPS set to continue to grow.

Shorts at approx 1.58% with Gladstone very slightly reducing a few days ago.
Philadelphia Financial Management of San Francisco, LLC 0.52% short
Gladstone Capital Management LLP 1.06% short

Tempted to buy in again soon but unsure. Are they going to need a fund raise soon or do they have enough cash?

I forgot to mention, that at the current price STM offers a dividend of approx 10%.

Looks good to me and glad I added yesterday.
I agree it is strange the sp has dropped so much and possible it will drop to low 20's but I do not see why it would be a reasonable price.
The EPS is set to grow and with the acquisition at E6.5m for a profit making company of nearly E1m it looks a very good buy.
PE is low at 9 with the PEG at just 0.35.
The company is cash rich giving it an EV of £21m compared to the market cap of £24m.
NAV is 38p.
Below broker target by 180%.
All in all it looks pretty good and the drop could just be from ii selling and lack of general interest.
What you have to agree on is at this price, it DOES look good value.

FTSE 250 would be good news indeed.
I think the acquisitions have taken the market by surprise especially with how quick it has happened.
The company has gone from being loss making and via varies acquisitions looks to become highly profitable.
Could the company be seeing £2 again pretty soon?

Taken down for a sell or to let someone in lower?
Either way I've just added on the dip again.

Market cap of £14m
cash of £18m
Profit making for 2019 £3.6m estimate
Approx 20% margins
PE under 6
broker target 119%
Relative to sector 220%
NAV 59p

So, the last trading update was not great and saw the sp drop.
But this is still a profit making company and way under valued imo.
The company on it's current sp has a negative Enterprise Value of £656k which basically means, if it got bought out the buyer would be £656k better off!
The company has more cash than the market cap and is making profit!!!

More BOD buys. £2.50 target for me.

Just spiked 20% up. That’s the resistance broken.

..another bod buy. Not huge by any means but good to see they continue to add.

No trades showing, 24% down. added.

Yes it is very good news that they have reached their target, but the better news was they reached it 3 months ahead which then does not make it a case of just hitting their target, but are beating of predictions.

Good update for the company. Tax paid in full stopping additional interest accrued, albeit, with the help of a interest charging loan, but if HMRC do charge AUG, then it is all paid up.
So, worst case scenario, tax paid and best case a £40m refund. Personally I think tax will be paid in the end with a small reduction.
The group predicts its probability of HMRC case success at 60%, so a 40% chance of loosing. Court case is due late in 2020.

After this rns, I'm surprised the sp dropped yesterday. Looking at the trades listed there is no big trade showing and looks like it was all pi trades loosing patience.