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Real-Time news about Choicesuk (London Stock Exchange): 0 recent articles
|masurenguy: This won't play well for the share price tomorrow.|
|masurenguy: Looks like the sale at last nights close took the final stuffing out the the share price with some small sellers at 12.4p this morning. Validates JTC's decision to offload his entire holding at 19p the other day and move on !|
|goonertone: To little to late in dealing with the high st presence and as many have already said questions have to be asked re the timing of the trading statement and the trading update.
It was always a gamble on whether they could get rid off or turn round the shops to allow the potential of the distribution business to flourish and one that appears to have been lost. I would think that the future direction of the share price now lies with PG does he still see some value at these level, will he just hold what he's got or liquidate his position.
|masurenguy: Genuinely sorry to see this profit warning so soon after the recent dialogue here. I'm afraid that it does not look good and the recent GCI 'Avoid' advice on April 7th proved to be somewhat prescient.
There are a few questions concerning management that come to the fore here.
1. The Interim Statement, issued on April 3rd, stated that "ChoicesUK is well placed to complete its recovery plan......reduced costs and established margins should result in positive cashflow for the final 24 weeks of the financial period". Yet just 2 weeks later a profit warning is issued stating that the company "now expects that the financial performance for the current period will be substantially below market expectations". They are basing this on just 4 weeks sales up until April 7th ! This is just 4 days after the Interims were released and I would be incredulous if management had absolutely no idea of trading performance over that 4 week period just 4 days prior to its conclusion !
2. I find it incredible that 4 weeks trading is suddenly going to have such a major impact over a complete 24 week period. Yes I know it included Easter and that the weather was unseasonally good for at least half of that time but it is not as critical as the Christmas period. Not disputing that it is an important period but one has to really question whether it is being used to explain some other deeper rooted difficulties !
3. Why did Michael de Kare-Silver resign so abruptly two days ago after just 3 months as an NXD ? There was a comment in the interims that "we will benefit from his considerable experience in internet trading and electronic commerce" and yet 2 weeks later he has suddenly gone and 2 days after that there is a profit warning. Obviously we don't know all the reasons for his brief tenure but the impression created by the timing of his departure can hardly be viewed as positive !
4. I don't think that there is any reason to question the honesty of the new Chairman either at CHUK or previously at Homebuy. However I think that there were valid reasons to question his credibility as a result of his history at Homebuy and therefore to question the Boards judgement on his subsequent appointment here. He has only just taken over so cannot be tainted by the profit warning only 2 weeks following his appointment but one has to ask whether the general Board credibility issue, that now inevitably follows from this sudden profit warning, will be mitigated in any way by his presence at the helm even, if he is only (as some have maintained) just a figurehead !
With Retail business declining, Local business flat and Direct expanding into a very competitive marketplace, the forward picture was already fraught with potential challenges. Management have now really shot themselves in the foot and the ensuining impact on their credibility could be a real handicap on the share price for some time to come in my opinion.
I think shareholders deserve much greater transparency here and the further announcement "after assessing its strategic and financial options" should be issued as soon as possible.
The shares are down 36% after the first hour this morning. Even at this price I personally would not be tempted to buy in since there are far too many negatives to make this an attractive recovery play and management do not exactly inspire me with confidence.
My view does not constitute advice to anyone to either buy or sell since everyone should do their own research and make their own decisions. I hope that I'm wrong and that JTC & GT recover a good chunk of their current shortfall but this one is now finally off my watchlist !|
|masurenguy: You're welcome. Obviously Gyllenhammar sees future value potetial here too. However the share price could remain under pressure and continue to move lower as a result of further negative market sentiment emanating from the news that Stegrego highlighted in post #398 above. From The Telegraph:
Video rental chain in liquidation
By Harry Wallop
Last Updated: 08/04/2007
The meltdown in the video rental market has claimed its biggest victim yet, with the country's third-largest chain of stores crashing into liquidation. Apollo Video Film Hire, which ran a chain of over 100 shops, has been wound up by its administrators David Rubin & Partners after they were unable to sell the stores. David Rubin said: "The only way video shops can survive is if they are in specialised locations. These were mostly tertiary sites."
The collapse of Apollo has emerged in the same week as its larger rival Choices UK unveiled plummeting rates of video and DVD rentals. Over the past two years, piracy, internet downloading and rampant price deflation of DVDs has all but destroyed the market for hiring films from high street shops.
Earlier this year Virgin Megastores said that its DVD sales outstripped CD sales for the first time. Supermarkets have added to the woes by importing DVDs from Jersey and selling them for as little as £3.93. Consumers who do want to hire films now have a range of internet providers from Tesco.com to Lovefilm.com.
This won't make it easier for CHUK to dispose of unprofitable retail shops either !|
This subject has been debated at length and yes I agree that music in particular is going through a sea change. However, CHUK are driving Games and DVD's mainly these days and should be entering the Blueray/HD-DVD market also I believe (which is better protected from rippers at the moment).
The shops are a problem because of the sheer cost of running them. HMV are finding this out also, as you have pointed out.
In the last RNS the management said:
"Management is considering a strategic plan to ensure the Retail division,
ChoicesUK stores, will not detract from the value and success of other Company
That sounds to me like they intend to offload the shops and concentrate on the primary business of ChoicesLocal.
If they do, I estimate that the rest of the business is delivering normalised EPS of 13p 'and growing'. With debt levels dropping fairly rapidly (imo), the management will soon have the option to either:
a) pay a 10 % dividend to drive the share price
b) use cashflow to buy receivership opportunities as they did with andromeda or
c) Buy the company off the market at a premium.
The overall market will shrink and the capitalist system has a way of righting imbalances but profit is profit and the remaining core business will have a future. Those who are still standing in the end, will share the cake (however the future designs it). What is more, when the competition is reduced you will see margins harden, which will have a profound affect on CHUK's and others profit. You could say that those that are making a profit are squeezing the competition out of the market.
CHUK will definately be one of those left standing imo and eventually a beneficiary of all this misery. All we are seeing is progress and the culling of the weak. Todays share price is a gift imo.
As ever all IMHO and DYOR
|steve133: i see that they still have not updated the shareholder section of the website.but looking at the amount of shares in issue i cant see anyone buying large amounts of shares in the near future.so any further rises in the share price will be pi driven so chance is that we will drift or sit at this price for a good 6+ months yet untill +news.i say this as we already know what the interims contain there or there abouts.do you agree jt start collecting your nuts its time to hibernate lol|
|masurenguy: "My 1 year share price forecast for HET is 150p and then possibly 240p two years out."
Well it does not look like it will get to the first forecasted figure by April 24th this year ! I would have thought that the recent HMV and EMI Christmas figures do not augur well either.|
|jtcod: It never ceases to amaze me how investors fail to grasp the potential of these investments. Companies like CHUK and AMU are classic Ben Graham stocks and the nearest thing to a racing certainty you're going to find on the stock market.
With such low valuations against this years projected earnings, all the management need to do is maintain those earnings, which is hardly a problem, (given each has made significant savings on overheads during the last 12 months).
If the price doesn't double over the next 12-15mths, the managements will take them out when the debt is reduced. If the management didn't do that, a competitor would. Debt levels are the key. Once debt drops to around 3-4m, if the share price is'nt higher, the company is in play for a bid. Either way, you gets your profit. It's that simple imo.
As ever all IMHO.
|edmundshaw: Rivalling AMU for cheapness (PE between 3 and 4), and with less perceived risk (due to results delay etc) until yesterday (of course, with results out, AMU is now much safer).
I recall our friend Benjamin Graham kept banging on about 2 important factors: value and margin of safety. CHUK has both in spades, and now even has a modicum of internal diversification (another safety factor which BG recognized).
I'll be interested to see if the pattern of results/share price for CHUK parallels that of AMU.|
Choicesuk share price data is direct from the London Stock Exchange