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Crawshaw – argues “pleased with the progress we've made”, so why are the shares lower?

By Steve Moore | Thursday 29 June 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.

An “AGM Trading and Strategic Update” announcement from fresh meat and food-to-go retailer, Crawshaw (CRAW) includes that “we are pleased with the progress we've made” and “the trading performance of the business continues to be stable following the improvement in like-for-like sales from the initiatives introduced throughout the estate”. The shares have responded to the announcement… approaching 14% lower, to 25p! Hmmm.

This is with the “stable” trading performance being like-for-like sales down 4.5% for the first 20 weeks of the financial year. This following prior results which noted “like-for-like sales have improved from -13.0% in Q3 to -7.4% in Q4 further progressing to -4.5% in the first 10 weeks”.

It is added “our new fresh meat factory shops continue to perform well and we are further encouraged by our most recent opening at Crystal Peaks, Sheffield”, with plans to open a further 4 such shops in the balance of the current financial year and that “following the announcement of our strategic partnership with the 2Sisters Food Group, we are making good progress on the transitional plans and operational synergies that will deliver the expected customer and financial benefits”.

However, this is against a noted “backdrop of industry-wide cost pressures and a challenging consumer environment”. As such, I’d want to see the noted financial benefits being delivered before reconsidering a cautious stance here – and this particularly with previous sales trend progress having “required a moderate level of margin investment”.

Why no mention of “margin” in the latest update? I continue to avoid.

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