Discounting sales from the acquisition, I would suggest the trading performance of the 'original' WGB is a bit indifferent. Not sure how much this was affected by the fire at Loughbrough. Colefax reported recently and they had some impressive increase in sales to the US - I am not sure if WGB's sales the US have grown that much, albeit a relatively smaller proportion of overseas sales compared to CFX. With last night's big stock market falls in the USA and far East, I am not sure that this trading statement is going to help WGB's share price much today. I am just going to my 'dug-out' to see what happens today on the LSE!
Why should n't poor sales continue into next financial year?What is so special about 30 Jan 2018,start of next financial year,that everything will revert to previous levels?
Was the good demand that the up market products from Standfast factory had enjoyed in the first 9 months of this year the exception perhaps because their products had been in very short supply for the year previous year due to the closure of the Lancaster Standfast factory and merely pent up demand and things have reverted to a more normal demand?After all the feeding frenzy in buying over priced London flats which require kitting out by "investors" in the hope that they could flip them for even more has ground to a near halt certainly would have helped sales.
The Far East "investors" are buying Bitcoins instead!
I thought the shares were expensive at 200p level based on previous figures;Maybe they are reasonable value at present level IF we see an uptick in sales in the near future but it is far from a certainty.The new price may be the right price at best.
IMHO the fire is not the issue. If the maximum profit impact is £0.5m then the indication here is that this is small, some unwelcome distraction, another insurance claim, etc, etc but not a sell signal.
The shares look oversold based on the information shared with us shareholders. A few months of poor sales performance highlight the vulnerability of the business to economic fluctuations but do not halve the value of the business which wasn't trading on aggressive multiples in the first place.
The loss of brand director suggests that the business executives believe that there have been mistakes made and that these can be rectified. Appointing new marketing execs does not lead to immediate changes in fortune , but I believe these brands are pretty resilient and can recover any lost ground. Is there a lot of lost ground? Well there cant be that much given that trading was ok 6 months ago.
So I for one expect the recovery to continue allbeit the 230p share price may not be back for a while
RNS now out:.Spread 126-128p. Volume 502k. A bit of bargain hunting now. WGB seem to be playing down the consequences of the fire claiming that profit loss <0.5m (now that does not sound like a small fire to me!). WGB now seems to be accident prone and that is a bit worrying, plus apparently firing the brands director (so my industry source believes) due to losing their way. Now 127-128p. All the best for those holding on.
"Update re Anstey Wallpaper Company
Walker Greenbank PLC (AIM: WGB), the luxury interior furnishings group, announces that a minor fire at approximately 22.00hrs last night at the Company's Loughborough wallpaper factory, Anstey Wallpaper Company, has damaged one of the factory's printing machines.
Whilst the fire was minor, it is too early to know when the damaged printing machine will be back in production and if there is any potential impact on the Company's performance for the current financial year ending 31 January 2018.
Dependent on the timing of repair, some of the orders planned to be printed on the machine might be delayed into the new financial year. The maximum potential impact on profitability in the current financial year is expected to be less than £0.5m.
The repair to the printing machine, and damage to a small amount of stock, are covered by the Company's comprehensive insurance policy.
The Company will issue a further announcement as soon as possible."
Ask dropping off now....currently 128 (from 135)
It stayed at 135 for a lot longer than i expected this morning despite a lot of sells, so thanks for the prompt posts. Shame cos think we might have had a good little rally on here if not for the fire.
Must be an RNS soon and see what happens to SP afterwards, and then maybe i'll re-group....
On the face of it it may not be too disastrous, but having 6 appliances on scene and taking to 10:48pm to sort the fire out, lots of smoke damage does not sound good. WGB's insurance premiums must surely be going through the roof now?
Looking at today's market, still shows spread of 128-135p, trades of 154k, mostly sales. It cannot be long before an RNS is issued - as the fire took place last night it might take WGB a little while to assess the impact of the fire.
Thanks. Just sold my 5k for 130p a share. Checked on Google and yes Beeches Road is where the factory is:-
They may do well from insurance again - but it sounds a significant fire/ smoke damage that will further disrupt business - that was already facing a downturn in volume.
I just felt safer taking a quick profit of £300 in 5 days! - rather than the prospect of making more money on insurance.
End of overhang? Shortly after I bought a few I saw some large sells going through. I wondered if this might be the end of a line of sells - and if so a bounce would be in order. The share movement today seems to give that concept some credence.
Alternatively the departure of the previous brands director might be something to do with the reported sudden change in outlook/ the new brands director is highly regarded. Supposition I know. Either way I have a bit more confidence to top up should the price fall back again - specially as I have just made a quick killing with Tesco, so I now have some cash at the ready.
Had another look. Seemed to be lots more shares floating around after the last acquisition, with possibly lots more to come. Then I realised that the lowest issue price seems to be about 175p, so its a pay-away deal. Bit careless losing the brands director so soon. A bit concerned that the value of the £ has increased and might reduce margins (especially if material has been bought when the £ was low and now needs to be re-exported) Interested to note the US sales content of the acquisition - and possible synergy here. After a bit of deliberation, for old times sake and spread my portfolio wider I have just bought a token 5k shares at 123.56p. .. but also partly because at this price it meets my 'easy' 20% share price gain possibility. The share spread remained rock solid - long gone are the days when it used to jump whenever I made a trade!
A few months after a positive trading statement the company issued a profit warning flagging dramatic drop in sales and the share price has subsequently halved.
It seems to me pretty difficult to understand the scale of the reaction. A few reflections:
Management has a track record of sustained delivery and they seem to me to have managed their way through the factory disruption pretty effectively.
That being said, I simply don't believe the economy has turn dramatically in 2 months - I was running a consumer business in 2008 when the economy was crashing and the rate of fall off of demand for a premium product was noticeable but not as dramatic as implied in the profits warning which implies either a loss of business controls or an exaggeration of performance at the half year.
Also the business has a number of areas of resilience - co-pack manufacture and export all of which should be growing strongly notwithstanding UK economic downturn.
So my guess is that what has happened is:
1. Exaggeration of performance in half year results update
2. A degree of panic around a profits warning - poor wording which communicated uncertainty without doing anything to provide a backstop to trading performance
3. The business will show a step down and then recover
On that basis, the shares appear to be cheap once more - and I have topped up. Back to £2 soon - perhaps not for a couple of years, but that still makes it an interesting investment.
I have been away for a little while and just catching up on what has been going on. Wow WGB have really had a bad time recently! I used to be a strong follower of WGB (even visited their New York showroom!) and at times held far to many. However I sold out a year or so ago as I felt that they were getting over valued and my perception that that the management were getting progressively more greedy with their take. The yield was not that great with lots of future good news factored in.
That said they have been having a charmed life up to now with some good trading progress. However, the furniture market is now going through hard times eg MultiYork (who offer WGB fabric coverings) have just gone bust. I am not sure how the value of he £ has been affecting things as WGB use to import lots of materials, in particular from Italy. The big opening should be the USA with the low value of the £. I will have to study further but my recollection was that whilst some progress has been made, they are not really as well established as other players such as CFX. Now that is another story - WGB seemed to be getting enough market cap (but now almost halved at £87m) to take on CFX (£50m). Now that seems to be a distant hope, CFX once considered buying WGB but missed the boat - now they are too small and their Chairman is very conservative as his share holding is his pension pot! In a nutshell I do not think there will be a takeover of WGB in the short term, especially with the uncertainties of Brexit negotiations.
That said, the share price is back down to a level where I might start to think about building a small stake. Although I am still heavily invested in other shares (such as APF) whom I think are going to do well in the near to medium term, but as their value is achieved I will be looking for new targets.
To clarify I was suggesting that if conditions indicated in the recent trading update which covered trading,current & expected, from mid October on to company financial year end based on present/likely order position persisted beyond the present year end (Jan 28 2018) into all of next financial year that has caused the company to indicate that earnings would be down by 10% this financial year. This would translate into a profits drop of circa 35% for next year.We are talking profits drop not turnover.
Turnover would be reduced by a much smaller amount as the problem seems to be mainly in high end products in UK.
The cause of the likely 10% fall in profits relates to trading in the period from mid October thru to the year end in Jan 2018.If this fall off continued thru next year it would imply around 35% reduction on an annual basis in other words a reduction in earnings from around 15p to 10p.
Whilst this probably presents a too gloomy picture particularly as some parts of the business are growing,for example Clarke & Clarke,export sales & license income it is unlikely that sales of high end products to UK market will suddenly bounce back in February.Recovery is probably going to be gradual.
On the positive side this is a good business,soundly financed with upgraded printing facilities at Standfast in Lancster thanks to Storm Desmond and excellent brands and we are also looking at a much more modest valuation even when viewed at earnings of say 10p.
However I do not think anyone should buy with the idea that we are going to see an early return to the £2 plus level.You need to look at its merits at present price and take a long term view.
I'm in for a few...to much bad news already in the price IMHO. I think the anticipated slowdown in luxury furnishings may not be so bad as expected (and judging by the fall, it's gonna be awful)
As BB states, we'll see at next update..
If there's not been another update by the end of the first week in Feb, then I think it'll be safe to assume the warning was just a blip, but the market will now be nervous about the possibility of getting another warning before then.
If the expected eps of 14p is delivered along with an optimistic view for the next FY, then the current sp will be seen as being cheap, but beware the old adage about profit warnings ...
After the recent profit warning, the forecast EPS has been downgraded
from approximately 16p to approximnately 14p. That, in my view, does
not warrant a share price fall of anywhere near to what we have
seen / are seeing. With export trade rising, I would think the fall in the
share price is grossly overdone. Other opinions pleaee?
"Is it time to buy into AIM-listed provider of quality interior furnishings LSE:WGB:Walker Greenbank, having plunged nearly 40%?Barely a month ago, I compared it with LSE:TPS:Topps TilesÂ with a caution about the near term after a vague profit ..."
"Today's share price slump at upmarket wallpaper and fabrics maker LSE:WGB:Walker Greenbank has been made all the more stunning by the speed at which its fortunes have turned.At the start of last month, the company behind brands including ..."
"Can AIM-listed luxury furnishings group LSE:WGB:Walker Greenbank regain momentum, or is it best to sell lest discretionary consumer spending falters?It's also a pertinent example of export issues under Brexit and valuation, compared with ..."
"Is it time to reconsider AIM-listed luxury interior furnishings group LSE:WGB:Walker Greenbank at 220p currently?I drew attention repeatedly from 22p in January 2010 when it traded on a forward price/earnings (PE) multiple of about 8 times, also ..."
'Sales in the year ahead are expected to benefit from the new
collections launched this spring, from the continued momentum of our
licensing activities and from the significant contribution from Clarke &
Clarke. With this backdrop, we remain confident in meeting the Boards
expectations for the current financial year.'
America up 5% odd, div up 25%.... Would have been better if not for the flood. This has been trading sideways for a while now and i'm anticipating a breakout at some point if they continue to perform this well.....
There was I saying that Colefax had been doing well, however some disappointing results were published today. They reported poorer sales to USA plus a large technical loss on dollar/£ exchange rate change with their hedged position. Presumably a similar situation may arise with WGB since they operate in the same market space, albeit with less exposure to the USA?
...and another windfall payment of £1m and more to come. My these insurance people are have guaranteed their place on WGB's Christmas card list for many years to come!
As an aside, CFX have been doing really well just recently - no doubt helped by the £50k increase in profits for each 1c fall in the £/US$ exchange rate. If WGB benefit in kind (their USA business is much smaller) then they should also have better profits from the USA. Although CFX sources much of their material from WGB, I don't think that the volumes will have radically changed - especially with their factory downtime.
Looking at today's announcement on insurance payments I am reminded once again of the benefits of these incidents when insurance pays out. The opportunity to re-build a factory from scratch is significant. Laying out the factory from a blank sheet of paper, putting down brand new lines that replace older less efficient lines, re-building stock and replacing stock that probably included obsolete stock that would never sell, all of this is enormously beneficial for future management of the daily operations of a factory. The share price at Walker Green back has languished since the flooding incident. Investors were no doubt concerned about the loss of sales and sales momentum. Management has a great opportunity to rebuild the Business with a state of the art manufacturing facility. I think investor reactions have not reflected the positives of this story and the share price will recover strongly
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