FOOT20 Jun 2018 09:18
Taken from the FOOT bb, original source 'The Times'
Personally, Im trading this from yday's buys statrting at 78.94p and will simply add on further dips. Halifax messed up yday aftern when bid-offer was 79-80p. Cldnt say no, see how it goes:)
''Footasylum
Far be it for The Times to cast aspersions about its audience, but it is unlikely that many readers of Tempus have been inside a Footasylum shop. It now appears they should avoid the shares, too.
The shoe retailer has attracted a strong following among the 16 to
25-year-old market. Its stores are dark, play pumping music and exist on knowing what is “cool”. Clarks, it is not.
The company listed on Aim last year and was valued at £171.3 million and 164p per share. It has 67 stores and a strong online presence. It was founded in 2006 by David Makin and John Wardle, the founders of JD Sports.
At the time of the group’s float, investors had been positive about the distinctive “voice” that the brand holds among young people and its “first move franchise” deals with the likes of Adidas and Nike, where manufacturers agree that a retailer can sell their product exclusively.
Yesterday, however, investors cut the company’s value in half, with the shares closing down 52 per cent, or 87½p, at 80p. That is because earnings before interest, tax, and amortisation are now expected to grow by less than 10 per cent for 2019, compared with market expectations of 15 per cent. You cannot deliver a downgrade when you are on 40 times your price-to-earnings ratio. That will annoy shareholders. Pre-tax profits also dropped, by 76 per cent to £1.9 million, in its maiden results since listing on sales of £194 million.
Footasylum said that trading since the start of the financial year had been affected by the “widely documented weak consumer sentiment on the high street”, but it is the lower gross margins trends that are causing concern. It has been affected by the discounting of footwear and fewer first move franchises. That’s because brands have culled the list of retailers they give exclusive launches to and have been going straight to the consumer. That trend is likely to continue, with bigger names such as JD more likely to end up being included. Footasylum looks likely to be hurt in the process.
Advice Sell
Why Margin trends look worrying and product allocation for the likes of Nike and Adidas only likely to fall''
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