the times | Monday April 4 2022 37
so it just means they’re probably
going to have more growth coming
through,” Charles Hall, head of
research at Peel Hunt, the broker,
said.Auto Trader
The motor retail website stands to
benefit not only from the structural
shift of more consumers shopping
for cars online but also from an
increasingly cost-conscious
customer’s desire to shop around.
Shortages in the supply of new cars
are not helpful and physical car
stock on the site was down 9 per
cent to 436,000 over the six months
to the end of September. However,
so far Auto Trader has navigated
those pressures, with first-half sales
and earnings figures significantly
higher than in the same period in
2019 as the group persuaded dealers
to pay for new and enhanced
services.
Jefferies identified Auto Trader
in its Fallen Angels screen, an
analysis of stocks that fit criteria
including a return on capital
employed of at least 10 per cent and
a two-year price/earnings ratio
below the ten-year average. The
broker reckons that earnings will
increase at a compound annual rate
of just over 11 per cent over the next
three years.Total returns
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%Nasdaq CompositeFTSE 100A golf retail chain bought out of
administration three years ago is
planning to open thirty new golf
courses over the next five years after
reporting a surge in profits and sales.
Pre-tax profits at American Golf,
Europe’s largest seller of golf accesso-
ries, have risen to £7.8 million from
only £200,000 a year ago, while sales
have grown by 43.8 per cent from
£115.4 million to £166 million. The
business was lossmaking when it was
bought by Endless, the private equity
investor, from Sun Capital in 2019
through a pre-pack deal.
Gary Favell, its chief executive, said
that the business, which now has 95
shops in the UK and Ireland, has
bought half a dozen golf courses in
the past year to support more enthu-
siasm for the sport. American Golf
now plans to open 30 new sites with
golf courses, shops and restaurants,
an expansion expected to double the
company’s workforce to 2,000.
The company’s shops have bucked
the wider decline on the high streetGolf chain tees up
for 30 new courses
because its services, such as custom-
fitting golf clubs and putters, cannot
be easily replicated online.
Favell, 65, said: “We’ve taken what
was an ordinary golf retailer and
made the user experience more
welcoming so that everyone can en-
joy — men, women and children of all
ages, backgrounds and abilities —
we’ve made the sport accessible to all.
The result is year-on-year double-
digit growth since 2019 and a leading
market share.”
Favell said that the sport had
enjoyed a boom in demand from new
golfers who had more leisure time
“because flexible working means
they’re not spending an hour driving
to work”. Covid restrictions have led
more people to find ways to socialise
outdoors.
About three million to five million
people play golf in the UK, with
1.2 million female players as the sport
has become more inclusive.
The company has partnerships
with Brendon Lawlor, the world No 1
disability golfer, and Carly Booth, the
Scottish professional.Ashley Armstrong Retail EditorThe owner of Smythson has hinted at
family succession planning after its
92-year-old chairman stepped down.
Jacques Bahbout has owned the
upmarket leather goods brand since
2009 and is chairman of Tivoli, one of
Italy’s largest handbag makers.
According to filings at Companies
House, Bahbout stepped down in
February but would remain as a non-
executive. Instead Jacky Bahbout, 40,
who joined the board last year, has
assumed an executive role as chief
brand officer, which the company
said was a “positive evolution of the
family involvement and continued
investment in the group”. Stefano
Giacomelli, already deputy chair-
man, has been appointed chairman.
The accounts for Holdsmyth, the
brand’s parent company, show that
sales fell to £22 million from £34 mil-
lion in the year to March 28, 2021.Smythson turns page
Meanwhile, the business returned to
the black, with a pre-tax profit of
£452,000, bouncing back from a loss
of £8.4 million in 2020.
The luxury business was started in
1887 by Frank Smythson, who
opened a Bond Street boutique in
London promising “stationery and
fancy articles of a high-class charac-
ter”. It is best known for its gilt-edged
paper diaries and notebooks.
Smythson said that it was continu-
ing to work on exiting non-profitable
stores, including shutting its site in
the World Trade Center in New York,
and reducing rent. Digital growth
remains more than 30 per cent up
compared with before the pandemic
The company said that owing to
the “tough and unique economic
circumstances created by the pan-
demic” it was writing down the value
of its investment in the brand by
£15 million, which meant it would
take longer to recover its investment.Ashley ArmstrongLindsley Ruth, boss of
Electrocomponents,
which is set for growthTwentyFour Income
Rising interest rates are anathema
for bonds, eroding the value of the
fixed coupons they pay investors
until maturity. Yet TwentyFour
Income invests in less liquid,
floating rate credit instruments,
which means that, as interest rates
rise, so, too, does the coupon paid
by the trust’s underlying
investments. The fund aims to
pay out
quarterly
dividends
with a target
yield each financial
year of 6 per cent.
For TwentyFour, the risk is that
there is a significant deterioration
in credit quality and a rise in
defaults. Yet it is diversified, with
more than 100 investments
across a range of British and
European asset-backed securities.
The trust also has never
experienced a default in nine
years since inception. The trust,
which usually trades at a premium
to net asset value, is priced at a
4.5 per cent discount.
Electrocomponents
The disruption pervading global
supply chains might naturally hurt
sentiment towards distribution
specialists such as
Electrocomponents, but the
FTSE 100 constituent, which
distributes more than 500,000
products, electrical and electronic
parts and spares to about 80
countries, is on track to deliver
revenue and pre-tax profits ahead
of recently raised guidance for
this year. Last week the distributor
said better-than-expected revenue
and adjusted operating
profit margin meant that
adjusted
profit
before
tax this
year would be ahead of the
£306 million forecast by
analysts, which was already
more than two thirds above
last year.
JP Morgan, the American
investment bank, raised its
target price on the stock to
£13.50, from £13, on the back of
the bullish trading update.
There is the chance that
Electrocomponents could use
longer delivery times to its
advantage. “It’s probably easier
on the pricing side. You need to
have a higher level of inventory,tBusiness