Angling Direct shares tumble on profit warning
By Josh White
Date: Thursday 18 Aug 2022
(Sharecast News) - Angling Direct said in a trading update on Thursday that its first-half revenue was up 1.3% year-on-year at £38.9m, although it warned that full-year earnings would now be "materially behind" market expectations.
The AIM-traded firm said retail store sales were ahead 9.8% in the six months ended 31 July at £21.9m, while online sales were 7.9% lower at £17m.
It said that was driven by an 11.1% decrease in UK online sales, to £15.3m, while online sales in Europe were 36.9% higher at £1.7m.
"The board has remained focused on delivering its long-term omni-channel strategy of profitable growth through both online and bricks and mortar stores," Angling Direct said in its statement.
"Additionally, considerable management focus has been spent on maintaining growth whilst managing gross margins and mitigating cost inflation.
"Whilst facing similar economic challenges to the UK, the highly fragmented European market remains a very attractive strategic priority for the group to accelerate market share."
To deliver on its strategic objectives, Angling Direct said it continued its planned investment to drive European customer acquisition in the period, and also invested in margin, where appropriate, to further establish its competitive position.
"The company continues to strengthen its customer proposition by developing several innovative, digital first and industry leading initiatives, including the ongoing refinement of its trading app, expanding its own brand penetration and developing a range of exclusive branded products, all of which further differentiate the company from its competitors."
Looking ahead, Angling Direct said its focus remained on gaining market share both in the UK and Europe over the medium-to-long term.
"The group will therefore continue to drive market share growth, leveraging its market leading position in the UK and strong balance sheet to ensure it is best placed competitively when consumer confidence returns.
"Despite the current exceptional macro-economic circumstances, the board continues to proactively manage operations and believes the company is gaining market share and demonstrating resilience in the UK.
"However there has been an inevitable impact from the ongoing cost of living pressures, declining consumer confidence and unavoidable inflationary pressures on trading."
Angling Direct said that more recently, adverse fishing conditions caused by the heatwave and its resulting effect on river levels and fish health had also impacted trading in the "usually busy" month of August.
In addition, those factors had impacted sales growth and profitability to a similar extent in Europe, as the company continued to invest in the early stages of its European rollout.
"As a result of these market headwinds, the group now expects to generate revenues marginally below current market expectations for 2023.
"However, pre-IFRS 16 EBITDA was now expected to be materially behind current market expectations for 2023, and in a range of between £3m and £3.4m."
At 1336 BST, shares in Angling Direct were down 13.29% at 31.65p.
Reporting by Josh White at Sharecast.com.
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