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Fulham Shore – after last time “what about profit & the balance sheet?”, a further “trading update”...

By Steve Moore | Wednesday 7 November 2018

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.

Previously writing on shares in Franco Manca and The Real Greek restaurant company Fulham Shore (FUL) it was on a “trading update” which saw me question “encouraging revenue increases”… but what about profit & the balance sheet?. Now a further “trading update”

This states; “Fulham Shore has had a successful first six months of the financial year with turnover and customer numbers across both of our restaurant businesses ahead of the same period last year. This performance continues to reflect the quality and value on offer at Franco Manca and The Real Greek as well as the dedication of our team.” Er, ok – though any actual numbers?, especially since the half-year ended on 23rd September, and what about the bottom-line?

... “We continue to search out well located sites for our two successful businesses in order to proceed with our prudent expansion programme. Since the beginning of the financial year, two new Franco Manca pizzeria have opened, in Bath and Cambridge. In addition, we have commenced the fit out of a new Franco Manca close to Aldwych, London, scheduled to open before Christmas 2018. This will increase the number of Franco Manca locations in the UK to 43, whilst The Real Greek currently operates 16 restaurants. We are planning to open a further Franco Manca restaurant early in 2019, with more openings to follow early in the company's next financial year which begins on 1 April 2019.” Ends.

But we can’t make an assessment of the likely prudence of the expansion as it’s yet again what about profit & the balance sheet? And expansion also brings more turnover and customer numbers, making the stated “ahead of the same period last year” even more meaningless!

It’s the ability to generate net cash which is the critical thing as always, but with again no further meaningful indications on this it’s still looking to the half-year results announcement - scheduled for 12th December - for useful guidance. As such, I currently can only retain a cautious stance whilst questioning what’s the point of a ‘trading update’ like the most recent two here?

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