Fishing tackle retailer Fishing Republic (FISH:AIM) warns full-year profits will disappoint due to an increase in costs in order to accelerate growth as well as a quieter summer fishing season.

This rebasing of 2016 forecasts - Northland Capital Partners downgrades its annual profit before tax estimate from £663,000 to £404,000 on the news - overshadows otherwise positive interim results showing the niche retailer swinging into profit on sales up 34% to £2.5 million. During the half, Fishing Republic continued to expand its store network and even grew like-for-like store sales by an impressive 16%.

Shares originally flagged the growth potential of one of the UK's biggest fishing tackle retailers by floor space at 16.5p in June 2015. So even after today's 5.6% price reverse to 38.25p, our 'buy' call remains 130% in the money.

The angling products specialist witnessed a quieter July and August – there has been an encouraging start to September trading however – and also flags rising costs.

Ambitious founder and CEO Steve Gross (pictured below), the former Captain of England's under-21 fly fishing team, wants to put the £3.75 million raised in June to work more quickly, investing the proceeds in the development of its online platform and to support the expansion of its store network.

PHOTOGRAPH BY DANIEL JONES 2014 +44 (0)7815 853503  info@danieljonesphotography.co.uk www.danieljonesphotography.co.uk

A key priority is to accelerate the shift to higher-margin own website sales and away from third party retailers such as eBay and Amazon. Impressively, sales from its own sites increase 153% year-on-year, albeit from a low base, helping Fishing Republic to generate a higher gross margin of 50% (2015: 44%) in the half.

Significantly, the oversubscribed placing introduced new shareholders, including retail grandee Sir Terry Leahy and ASOS (ASC:AIM)-backer Bill Currie, the highly rated former retail food analyst. Such retail luminaries are demonstrably excited by Fishing Republic's stated mission to consolidate a highly-fragmented fishing tackle market awash with over 2,300 independent stores.

Operating from large 'destination' stores staffed with people with a passion for fishing, it sells a vast array of products that span bait, line, hooks and floats and cater for all types of anglers (coarse, carp, game and sea fishing).

Fishing Republic - Sep 16

'During the period, we expanded our store network, opening two new stores, in South Birmingham and Crewe, and relocated our Hull store to new larger premises,' says Gross. 'We also completed the integration of our first acquisition, Cotswold Angling in Swindon, which has given us a presence in the South of England. The acquisition of Fantackletastic, in Lincoln, in September continues our geographical expansion, taking the Group into the East Midlands.'

He adds: 'Following the successful placing in June, we are now accelerating investment across the business, including multi-channel. We expect the benefits of this investment programme to come through in 2017. The group has a strong balance sheet and we are confident about growth prospects and will continue to consider further acquisitions and selective store openings.'


Issue Date: 22 Sep 2016