Fishing Republic – Where do we go from here?

PUBLISHED: May 04 2018 @ 02:00 | Comments (0) |

When I started writing about Fishing Republic (LSE:FISH) last week, market capitalisation was 52.2 shares multiplied by 8.5p at bid or 9p at offer price, i.e. £4.44m or £4.70m. But there has been selling since, which could be good news for deep value investors (but only if there are sound reasons to believe the underlying business will return to profits). Now market capitalisation is 52.2 shares multiplied by 7p at bid or 7.25p at offer price, i.e. £3.65m or £3.78m. This could be below net current asset value – we await the annual report to properly assess that.

Over rapid expansion by Fishing Republic (LSE:FISH) has led to a profit warning and a plunging share price from over 40p. If the profitable elements of the business can be identified and bolstered while capital is withdrawn from loss-making areas perhaps we’ll have a net current asset value investment.

The key questions

Are the original core of “7” still producing profits or, at least, can be revived fairly quickly?
Is the website operating profitably, or has a reasonable prospect of being made to operate profitably?
Are any of the 11 stores acquired or opened in 2016 and 2017 value-generating?
Can the unprofitable units be closed down without severe financial pain being inflicted, e.g. onerous lease contracts?
Will the company have enough financial resource to survive and see the profits come through from the above?
Is there still potential for growth, after sorting out the trading mess?
Will a competitor be interested in buying the whole lot?

There is much that has to answered in a positive way for us to be comforted! Thus you can see why I’m not interested in buying right now.

But, by keeping an eye on progress I hope to see a sequence of comforting news leading me to believe this company has a future. By doing this analysis now I’ll be ready to observe what Mr Market may be slow to perceive.

What has happened so far

The Mildenhall unit has been clo…

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