Currency in GBP
Last close As at 09/06/2023
GBP0.03
▲ −0.75 (−21.43%)
Market capitalisation
GBP2m
Research: Consumer
Unbound Group’s maiden trading update after its admission to AIM is reassuring. The core, Hotter Shoes, has reported FY22 revenue (£51.9m), EBITDA (£5.5m) and pre-exceptional PBT (not less than £0.2m) in line with expectations, as set out in our recent initiation. The announcement of a new trading partnership with Marks and Spencer (M&S) supports management’s medium-term expectations for double-digit growth from digital partnerships, which is part of the Wholesale division. The outlook for FY23 is consistent with our forecasts, with the launch of the new spring-summer 2022 collection expected on time, no apparent excess supply-chain disruption and progress made with the summer launch of the multi-brand ecommerce platform. We make no change to our estimates or our DCF-based valuation of 165p per share.
Unbound Group |
A reassuring debut |
FY22 trading update |
Retail |
17 February 2022 |
Share price performance Business description
Analysts
Unbound Group is a research client of Edison Investment Research Limited |
Unbound Group’s maiden trading update after its admission to AIM is reassuring. The core, Hotter Shoes, has reported FY22 revenue (£51.9m), EBITDA (£5.5m) and pre-exceptional PBT (not less than £0.2m) in line with expectations, as set out in our recent initiation. The announcement of a new trading partnership with Marks and Spencer (M&S) supports management’s medium-term expectations for double-digit growth from digital partnerships, which is part of the Wholesale division. The outlook for FY23 is consistent with our forecasts, with the launch of the new spring-summer 2022 collection expected on time, no apparent excess supply-chain disruption and progress made with the summer launch of the multi-brand ecommerce platform. We make no change to our estimates or our DCF-based valuation of 165p per share.
Year end |
Revenue (£m) |
PBT* (£m) |
EPS* |
DPS |
P/E |
Yield |
01/20 |
85.5 |
0.5 |
N/A |
N/A |
N/A |
N/A |
01/21 |
44.5 |
(14.3) |
N/A |
N/A |
N/A |
N/A |
01/22e |
51.9** |
0.3 |
0.9 |
0.0 |
66.9 |
N/A |
01/23e |
59.5 |
2.0 |
3.8 |
0.0 |
15.6 |
N/A |
01/24e |
65.1 |
4.7 |
8.3 |
0.0 |
7.1 |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Reported.
Hotter’s FY22 revenue growth of 16%, including 10% in Q422, had a broad base, with double-digital increases for both online and offline sales. Through H122, as reported in our initiation, Hotter’s UK Direct to Consumer (DTC) division had shown consistent improvement in online visits, order volumes and gross order value, attributed to more efficient direct marketing and a better user experience on the website. These appear to have continued, with strong growth in the customer database (over one million email addresses at end FY22 versus 767k at end FY21) and better average selling prices (+16% y-o-y) against a comparative affected by COVID-19.
Despite the previously highlighted supply-chain challenges, Hotter’s FY22 gross margin of ‘above 63%’ (61% in Q422) is consistent with our estimated 63.5% and management’s guidance of 64.5% (2% above pre-COVID-19 margin 62.5%) by FY23.
The end-FY22 net debt position of £8.5m is higher than our forecast of £7m, but we believe it is calculated before some residual cash items that transfer to Unbound on the finalisation of Electra Private Equity’s (relisted as Unbound Group) accounts.
Hotter’s new digital partnership with M&S, with the aim of ultimately offering 95 products for men and women on M&S.com, adds to the similar partnerships with John Lewis, Next and The Very Group, some of which had contributed to H122’s strong growth of c 28% for digital partnerships (5% of H122 revenue).
|
|
Research: Real Estate
Strong demand for care-based social housing underpins continuing positive accounting returns for Civitas Social Housing. The investment-grade credit rating has been reconfirmed and, alongside accretive share repurchases by the company, ‘insider’ share purchases demonstrate the confidence of the board and key members of the investment adviser team. This is not reflected in the share price, which offers an attractive 6.3% yield and c 19% discount to NAV.
Get access to the very latest content matched to your personal investment style.