What a difference a year makes - 12 months ago, the focus, quite understandably, was on the course of the pandemic and the lifting of the Lockdown (1) measures. For investors, it was the sustainability of the rally in markets seen since March 2020. Today, while we are still thinking about the lifting of lockdown measures, we are also concerned about two “old favourites” from previous decades. Inflation and the parlous state of public finances. The BoE has said that although CPI inflation rose to
Companies: AEMC BVC BAG BRSD BWNG CBOX CEG CTG CLG CML CRPR DNK EML ESC FAR FA/ GPH INSE MTW MOTR MMAG NRR NESF NMCN NSF OTMP OBD SAVE SCS STVG SNX SYS TMG TGL VLS VOG WYN
As midsummer’s day looms (where has this year gone?), there is greater optimism, in general, than may have been anticipated a few months ago. A post-pandemic, ‘vaccine-driven’ recovery demonstrated by increased consumer spending as lockdown measures are lifted has been one of the catalysts. The FTSE 100 has been range-bound in the last month 6,900-7,100. We have seen a combination of broadly positive company results across a range of sectors, further examples of M&A activity and a sequence of ne
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During the challenges of Covid, N Brown has taken the opportunity to accelerate its transformation programme. Strategic change was augmented by the FY2021 £100m equity raise, which alongside strong underlying cash generation sees the Group with a now comfortable balance sheet, with £80.8m of core net cash and all debt securitised against customer receivables. Management has again reiterated medium term targets for 7% annual Product sales growth and a 14% Group EBITDA margin, from which we take c
Companies: N Brown Group plc
The Budget offered a clear picture of the state of the economy. Put simply, the economy will be 3% smaller in three years’ time than it would have been without the impact of the pandemic. However, it is forecast to return to pre-pandemic levels by mid-2022, six months earlier than previously thought. The OBR forecasts that the UK economy will grow by 4.1% in 2021, (lower than the 5.5% outlined in November 2020). It has set its GDP forecasts in 2022, 2023 and 2024 at 7.3%, 1.7% and 1.6%. Positive
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tinyBuild— a leading video games publisher and developer with global operations. tinyBuild's strategic focus is in creating longlasting IP by partnering with video games developers, establishing a stable platform on which to build multi-game and multimedia franchises is to join AIM. Offer details TBC. Due mid-March. AMTE Power, a developer and manufacturer of lithium-ion battery cells for specialist markets, announced its intention to seek admission to trading on AIM. Admission is expected to ta
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In the last fortnight, we have surrendered some of the notable progress made over the last three months. That said, the optimism displayed by markets, driven by progress with vaccines and their rollout, persists. The recent direction of markets has been set by volatility in US markets, driven by specific retail market developments. Domestically, we have seen a broadly upbeat procession of results and trading updates/outlooks have, generally, been at least in line. The share price reactions have
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N Brown’s Q3 2021 period may prove to be pivotal to its long history, with a £100m capital raise and the move to the AIM market both completed in December 2020. Trading remains constrained, with product sales down 8.9%, and FS income falling 8.3%. However, in areas of focus trading was more resilient, with sales across the five strategic brands down by a more modest 1.4%. We reintroduce FY2021 forecasts in this report and will look to reintroduce estimates for further out in short-order, noting
We highlighted last month the (first) Santa Rally arrived early (unlike some other festive gifts). The second Claus(e) relief rally was prompted by the agreement between the European Commission and the UK on its future cooperation with the EU. Markets also reacted positively to the $900bn stimulus package agreed in the US. While the FTSE 100 and FTSE 250 indices rose by 1.6% and 1.7% respectively on the first trading day after the holiday and the FTSE 100 has recovered 28% from its low point in
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2020 has so far been a very challenging year for many UK retailers, with the tough economic conditions on the exit of CY2019 more than compounded by the ongoing Covid-19 crisis – visibility on sector profitability has been very low for some months. For N Brown, with its significant Financial Services (FS) business, the lack of earnings visibility is even greater given legislation that further tightens lending criteria and the impact of IFRS-9 on bad debt provisioning. We continue to feel that it
N Brown Group ('N Brown') has been through an extended mill, facing challenge after challenge topped off by COVID-19, which has taken a toll on its share price. FY2020 results confirm the well-flagged difficulties but also something much more virtuous, interesting and potentially enduring, in our view. The Group has to some degree channelled a couple of years restructuring into three months, doing so in a capital light manner, to make for a refocused Product proposition, a top-10 UK clothing & f
N Brown Group ('N Brown'), the increasingly digital clothing business supported by a credit offering, has issued a surprise announcement that Rachel Izzard will be joining the business as Group Chief Financial Officer (CFO) at a date yet to be determined.
N Brown’s 18-week trading statement to the 4th January 2020 surprises us with notably lower guidance on gross margins in both Product and Financial Services (FS), only partially offset by lower operating costs, leading us to downgrade FY2020 and FY2021 CPTP estimates (the cash flow impact is lesser than that on the P&L). Accordingly, we cut our FY2020 CPTP estimate by 16% to £70.2m and our FY2021 forecast by 20% to a similar level. The Product sales performance was resilient in a highly promotio
N Brown Group (N Brown) outlined a new strategy under CEO Steve Johnson in spring 2019 and we are pleased with the progress made against the priorities set. In H1 FY2019 the Group has, as expected, recorded lower product sales (-9.3%) in a weak and promotional UK apparel market whilst driving qualitative and quantitative results in Financial Services (FS). H1 digital revenues increased by 1.5% with EBITDA 4.0% higher year-on-year (yoy) leading to a small beat to both our and consensus interim ex
With the PPI deadline recently passed (29th August 2019), N Brown, in line with the wider industry, has confirmed it experienced a “significant increase” in PPI information requests and complaints (PIRs) through August. Whilst management continues to work through said PIRs, the Group believe it will be necessary to make an additional provision in the range of £20-£30m (over and above the £108m already paid or provided). As such, management is guiding to year end net debt of £460m-£490m (previous
N Brown’s Q1 trading update contains no surprises in our view and represents a solid start to the year. A decline in Product sales of -5.4% is broadly as expected (SC -4.8%, consensus -3.7%) and reflective of a strategic focus on profitable sales, with the acceleration of the customer migration to online evident in digital Product growth of +3.0%. Income from Financial Services increased by a more than robust 8.0% (SC +5.2%, consensus 4.6%). Guidance for FY2020 remains unchanged (provided 2 May)
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Draftkings has made a £16.4bn ($22.4bn) bid to acquire Entain in a cash (630p) and stock offer, valuing the target at 2800p/share. While the bid is promising, MGM (BetMGM’s JV partner) can throw a spanner in the works (counter-bid or a veto).
Companies: Entain PLC
Exactly one year ago, the FTSE 100 closed at 5,862, having fallen 100 points on the day, the lowest point since mid-May 2020, due in part, to the strength of sterling vs US$ at $1.34. One year on, the FTSE 100 has risen to 7,119, a rise of 21%, it remains 7% below the peak in January 2020. From an international viewpoint, US and European markets continue to trade at record highs. The US Federal Reserve is close to withdrawing some of its economic support this year as inflation picks up and the e
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Companies: Ten Entertainment Group Plc
Companies: Loungers Plc
SCS Group’s full year trading update for the 53 weeks to 31st July shows that the strong demand that has been a hallmark of post lockdown periods over the past 15 months has continued, with LFL orders through the Group’s weeks 47 to 53 up by 23.7% on pre-Covid levels. Lower costs underpin a 16% upgrade to FY21 CPTP expectations, whilst the strong order book drives a 17% upgrade to our FY22 CPTP forecast. We look for EPS of 32.2p and 30.8p for FY21 and FY22 respectively. Year end net cash of £87.
Companies: ScS Group plc
Last week Lookers announced a record set of H1 results for the six months to 30 June 2021. Underlying PBT was £50.3m, versus an underlying loss of £36.5m in H1 2020. This stronger trading, coupled with cost control and working capital initiatives, has led to substantial cash generation. Lookers has gone from net debt of £40.7m (excl. leases) at the FY20 year end to net cash of £33.0m at 30 June 2021. With legacy issues now behind them, good evidence of trading outperformance and a strong balance
Companies: Lookers plc
Kingfisher reported better-than-expected figures at its H1 FY21/22 results, with lfl sales and adjusted PBT coming in ahead of market expectations and management’s guidance. Lfl sales outlook for H2 has been raised, the share buy-back programme re-introduced and the interim dividend increased. However, the share price was down c.5% today, as investors worried about inflationary cost pressures and supply chain constraints which are expected to continue into 2022. We will update our estimates and
Companies: Kingfisher Plc
Pendragon have published a revised strategy update reaffirming the investment in its used car business and software platform to be funded through strategic disposals and lower capital commitments to the new car market. This includes the potential sale of the group’s US Motor Group. We have modelled the implications of successful implementation of this strategy which would result in a £200m swing from a net debt position to a cashrich group over coming years. Whilst the US disposal would be earni
Companies: Pendragon PLC
Pendragon has communicated a clear strategy focused on investment in its used car business and software platform to be funded through ongoing cash flow, strategic disposals and lower capital commitments to the new car market. This includes the disposal of the group’s US Motor Group. We have modelled the implications of successful implementation of this strategy which would result in a £200m swing from a net debt position to a cash-rich group over coming years. Whilst the US disposal would be ear
FY20 results – All Focus on Resuming Operations
Companies: Jet2 PLC
Dart Group has released an AGM statement this morning indicating satisfaction with load factors and financial performance achieved year-to-date in the context of the challenging operating environment. In addition, the Group has applied to change its name to Jet2 Plc in recognition of the recent sale of the Fowler Welch distribution business and the sole focus on leisure travel. We keep our forecasts withdrawn at this time.
The final results revealed adjusted PBT up 99% year-on-year, which was 10% better than forecast despite four upgrades during the financial year. This strong performance reflects the financial benefits that have accrued following the shift in the business model to online only, as well as management’s strategic decision to significantly increase marketing spend. A second special dividend for the 2020 financial year has also been announced, reflecting the strong cash flow characteristics of the bus
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Unprecedented times over the past 12 months have seen ScS Group deliver an exceptional set of H1 2021 results, dominated by the surge in orders post Lockdown 1.0. Group revenue grew 14.4%, with an incremental gross margin, tight cost control and UK government support (£6.6m) underpinning EBITDA* of £19.5m (£3.8m in H1 2020). We believe the average net cash through the period was c£97m (c£60m excluding customer balances). H2 2021 visibility remains low, with post Lockdown 3.0 demand uncertain, th
Compass again delivered an encouraging margin improvement in Q3 and anticipated a further “normalisation” in terms of business volume and margin for Q4.
Companies: Compass Group PLC