Fishing tackle retailer Angling Direct (LON: ANG) managed to beat previously upgraded forecasts for the year to January 2022. There is further growth in the first quarter of the new financial year.
The stores were not open until April, while a cyber attack hit online sales for seven days later in the year. Revenues increased from £67.6m to £72.5m even though online sales fell. UK online sales increased but European online sales because of difficulties with prompt delivery. The new Netherlands distribution centre has opened in time for the peak spring season, and this will help European sales to recover and grow.
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Pre-tax profit jumped from £2.7m to £4m, but this is not expected to be maintained. Singer forecasts a pre-tax profit of £2.8m on revenues of £82m in 2022-23.
This is because gross margin is set to fall, although it will still be higher than in the years prior to 20221-22. Operating profit margin will fall below the 2020-21 level, mainly due to the lack of Covid grants and the return to normal business rates.
There are inflationary cost pressures, but management is confident that the additional demand coming through in the past couple of years can be maintained.
There are currently 42 stores, including Southampton and Cheltenham, which were opened in January.
There was £16.6m in cash at the end of January 2022, even though inventories have risen from £12.5m to £16.3m. Cash did fall to £13.4m by the end of April. This still leaves scope for further openings
Angling Direct has launched a web trading app in the UK. This will be rolled out with German, French and Dutch languages. First quarter revenues are 5.4% ahead, but the next two quarters are the important ones for the company. The share price rose 3.5p to 51.5p, which means that the shares are trading on 19 times prospective earnings. That seems high enough for the time being, although there is significant long-term potential.