Crawshaw Group (13p and 1.0% of JIC) I attended a presentation on Monday night by Richard Rose the Non-Executive Chairman of an interesting small company called Crawshaws.
First a bit about Rose. He has had a very successful corporate career and has a tremendous record of creating shareholder value. You only have to look at the two other quoted companies where he is chairman; Booker and Anpario. He also joined Whittards when it was flat on its back and saw the share price go from 20p to the 200p when it was acquired by private equity. He bought a 15% stake in Crawshaws and so has an active interest in seeing it succeed. He may be non-exec but I got the impression that he is pretty hands-on.
So what does Crawshaws do? It owns 20 butchers shops in Yorkshire, Lincolnshire, Nottinghamshire and Derby and in the last year ending January 2013 it had a turnover of £18.8m. Supermarkets have long term contracts with their suppliers. When they do not call off all the meat they need this is where Crawshaws steps in; through an arrangement with these suppliers it will take the meat at a discounted price, (it may only have a few days shelf life), and sells it around 40% cheaper than in the supermarket! So, you are buying supermarket quality meat at a discount. The meat is cut in store and rather than being packed with an inert gas (CAP) it is sold in a cling film wrapped container with a little bit of red blood showing; it looks more attractive and fresher. Rose said supply of meat was not an issue with enormous head room in supply. It makes around 43% gross margins but at the net level he sees scope to increase from last year’s c.2.5% and has a target of achieving 10%; helped by higher margin sales of hot food.
Fresh meat accounts for around half a stores turnover with the other half coming from hot prepared foods. Rose mentioned that in the middle of next year they are going to trial a concept store that would sell just prepared foods. Higher margins and much higher return on capital. The cost of fitting out a store would be somewhat less than its traditional butcher shops, (£30-50k v £0.5m) and if successful could be rolled out on a franchise basis. If it succeeds than it would provide…
