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Crawshaw – argues “we continue to be encouraged”, the market isn’t…

By Steve Moore | Friday 6 January 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Fresh meat and food-to-go retailer, Crawshaw (CRAW) has updated on trading including “we have continued to build on the progress noted in our last update with the improvements in sales and customer numbers being maintained through December as planned” and “we continue to be encouraged by the customer response to the recent changes we've made”. So why are the shares currently approaching 8% lower, at 23.5p?

The update notes 13% sales growth for the five weeks to 1st January, though like-for-like sales were -3.8%. And even to get to here “has required a moderate level of margin investment (just say ‘price cuts’!), with gross margins in the like-for-like stores at 43.6% H2 2017 to date” (versus 44.9%).

The board “remain confident in achieving full year market expectations” - but, after a disastrous profit warning in September and subsequent update in November, this is no real achievement and a circa £1 million loss is currently expected.

I also note a stated focus now “centred on anchoring our value credentials and we will step up our marketing activity”. Further ‘margin investment’? Additionally, Chief Commercial Officer Kevin Boyd “will leave the business by mutual consent with immediate effect”.

In all, I’d want to see more positive progress before considering boosting my stance here. For now, I continue to avoid.


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