Retail logistics specialist Clipper (CLG) has raised earnings guidance after reporting a surge in first half profits as the Covid-19 pandemic accelerates the structural shift to online shopping, sending the shares 3.7% higher to 508p on Thursday.
Working with retailers ranging from ASDA to ASOS (ASC:AIM), the logistics solutions-to-e-fulfilment services specialist also highlighted the delivery of a successful Black Friday weekend for customers with many of its sites reporting record volumes.
And Clipper remains confident it is ‘strategically well positioned to capitalise on the mega-trend towards online retail, not just in the UK but also in mainland Europe’.
GROWING AT A RAPID CLIP
Results for the half ended 31 October 2020 revealed a 38.2% pre-tax profits surge to £14.3 million as revenue climbed 19.8% to £305.2 million thanks to new contracts as well as organic growth from existing customers in the UK and the addition of new customers.
Chief executive Tony Mannix told Shares the firm had 'never been as busy' with its e-fulfilment and returns management services.
Reporting a sharp drop in net debt, the cash-generative and increasingly confident Clipper upped the dividend by 14.3% to 4p.
Christmas 2020 is expected to be the most digital festive selling season ever by value and volume of online purchases and Clipper, whose customers also include Zara, PrettyLittleThing.com, Wilko and Morrisons (MRW), is among the companies best-placed to profit.
MATERIAL UPGRADES
Earnings for the year to April 2021 are now expected to be ‘materially ahead’ of the board’s previous expectations, the company said.
‘While there is disruption to the high street, its e-fulfilment proposition and shared-user network is a compelling solution to retailers as they respond to meet the acceleration in online demand’, enthused Numis Securities.
The broker upgraded its full year 2021 and full year 2022 pre-tax profit estimates by 10% and increased its target price from 450p to 580p, while Shore Capital raised its 2021 and 2022 EBIT estimates by 11% to £31.6 million and £35.4 million respectively.
Clipper’s executive chairman Steve Parkin said his charge had ‘successfully chartered the uncertainty and disruption caused by the pandemic to deliver impressive revenue growth’ and ‘benefited directly from the structural shift and acceleration of online retail such that our e-fulfilment and returns management division saw underlying EBIT growth of 63.3% which included a positive contribution from our Clicklink joint venture’.
During the half Clipper, which has processed more than 7.4 billion items of PPE and issued 3.9 billion items under a storage and distribution deal with the NHS, also started work on new contracts with the likes of H&M, Linenbundle, N Brown (BWNG), Next (NXT), Revolution Beauty and T M Lewin.
