Good morning!

My day started with a telephone call from the CEO & CFO of Premier Technical Services (LON:PTSG) (at the time of writing, I hold a long position in this share). I think they were a little put out by my report on Monday, flagging my concerns over high debtor days, and adjustments to the accounts. My approach is to just tell it how I see it, so if something concerns me, I'll say so - even if it's a stock I hold personally. Anyway, we ran through explanations of these points, which I'll update on below.

First though, let's have a look at the interim results from butchers & hot food chain Crawshaws, which has spectacularly fallen from grace in recent weeks.


Crawshaw (LON:CRAW)

Share price: 33p (down 7.0% today)
No. shares: 78.9m
Market cap: £26.0m

(at the time of writing, I hold a long position in this share)

Interim results to 31 Jun 2016 - I last reported on this small chain of butchers here on 15 Sep 2016. The event being a bungled profit warning, which failed to quantify how much sales had fallen by. It also seemed to cast doubt on the store roll out programme. The share price has crashed from 80p to only 33p, a drop of 59%.

So the big question here is whether the company has just shuddered from a bump in the road during its expansion, or whether the wheels have come off, and it's plunged into a ditch, upside down?

Sales trend - this is rather alarming. The progression has been (for like-for-like ("LFL")) sales, as follows;

  • Q1 down 0.8%
  • Q2 down 7.8%
  • Q3 (first 7 weeks) down 15.8%


So what's gone wrong? It seems to boil down to Crawshaws trying to be a bit too clever by pushing up its gross margins. Customers have rebelled against this, and clearly taken their custom elsewhere. The excuses about weather, and football, are clearly nonsense.

What are they doing to fix things? Basically, lowering prices back down to where they used to be, when customers were happy to buy from Crawshaws. Also giving store managers more flexibility to tailor products & prices to what best suits their particular customers. That means giving up some margin though, and this is reflected in a full year profit warning today. It's a "materially lower" outlook…

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