Good morning,

The FTSE is up by nearly 2% this morning and the euro has surged following the first round of French presidential voting, won by the centrist and ex-banker Emmanuel Macron.

As a rule, I never react to events such as this. Some people can make a living out of reacting to political and macro events and I wish them well. For someone who is analysing individual stocks, however, it seems like a dangerous temptation to increase transaction costs and to get distracted from what matters most - the success or failure of individual companies.

It's worth keeping an eye on currencies, of course, but perhaps not a good idea to accidentally become a currency speculator!


Fishing Republic (LON:FISH)

Share price: 46.5p (+4.5%)
No. shares: 37.8m
Market cap: £17.5m

Final Results

This stock has divided opinion a little bit.

Today's results suggest to me that my mildly optimistic outlook may have been justified - the company is continuing to make progress on a number of fronts. The results are in line with expectations.

Key points:

  • 5 new stores in 2016 (taking total to 12), 3 new stores in Q1 2017, and another 3 soon.
  • Total sales up 41% to £5.8 million.
  • Like-for-like store sales grew by 16%.
  • Online sales decreased, as planned. But own website sales increased to £660k.
  • PBT £400k, and no exceptional items this year (pre-exceptional PBT £300k in the prior year).

Outlook sounds good:

The main fishing season, which typically begins in the second quarter of the year, has started well, helped by the recent warm weather, and the Board looks forward to reporting on further progress in due course.

Inventories: Paul has been unhappy with the high level of inventories, which increased further to £4.3 million at year-end.

Using the H1 report, I deduce that Cost of Sales was £1.8 million in H2 (this seems a lot more relevant than using a full-year number, given the store growth).

Annualising £1.8 million to £3.6 million would again leave us with the conclusion that inventories are being held for more than a year.

I agree that it's a bit unsettling, but would again counter with the argument that decent returns might still be achieved, depending on margins.

Fishing Republic's gross margin has increased in 2016 to 47.6%. Unfortunately, this has not yet translated into an improved operating margin, which sits at 7.2%.

My opinion

I don't consider…

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