Fishing tackle retailer Angling Direct (LON: ANG) is highly cash generative and it plans to use its cash pile for acquisitions to accelerate the growth towards the target of £100m of revenues in the UK.
There were three stores acquired in the first half, along with two new store openings. Cost pressures are making single store owners more likely to consider selling their business, so it is a good time to have more than £17m in the bank. AIM-quoted Angling Direct has the same cost pressures but it has been able to hold down its overheads.
In the six months to July 2024, revenues were 6% ahead at £45.8m with the growth coming in the UK. The MyAD loyalty programme is a success and three-quarters of UK revenues coming via this loyalty scheme. European revenues were flat with a small contribution from the new store in Utrecht, which opened in May. Pre-tax profit improved 35% to £2.3m.
MyAD has more than 330,000 UK members and there are initial sign ups from the Utrecht store. Three-quarters of UK businesses comes through MyAD – one-third retail, one-third online and one-third omnichannel. Purchases are more frequent and tend to be higher values. Also, own brand sales were 40% higher and that heped to increase gross margins.
Smaller stores have been opened and this should increase the potential number of stores that can be operated in the UK to more than 100. Opening hours are being adapted to boost customer traffic.
It is still early days for the Utrecht store, but trading is improving and the initial loss is not significant. The European loss was flat.
A new logistics facility will provide the capacity for further growth. Singers has maintained its full year pre-tax profit forecast at £1.8m, up from £1.5m last year. August and September were strong so Angling Direct is well on the way to meeting the target with potential to beat it.
Angling Direct is the number one in the market and it is in a strong position to achieve the target of more than doubling UK revenues to £100m. At 37.5p, the prospective multiple is 21, but this should come down significantly over the next few years.