During the pandemic, many physical stores were forced to close & consumers had far less choice.
Today, product availability has almost normalised with the retail industry now starting to bifurcate into winners & losers. As evidenced by only the very best companies delivering consistent ‘best-in-class’ results, such as Marks Electrical Group plc.
Indeed this fast growing, online retailer of household appliances (eg cookers, TVs, fridges, freezers, dish-washers, etc) said this morning that FY22 EBITDA margins of 9% (8.1% H1) were in line with expectations on Q4’22 LFL sales up 19% LFL to £20.7m.
Impressive numbers coming despite tough YoY comparatives & where some rivals (eg AO) have stumbled - alongside backing up an outstanding Q3’22 & ending the period with net cash of £3.9m.
This momentum (re March revs +25% LFL) though could be just be ‘tip’.
Thanks to MRK’s tried & tested model of customer/operational excellence (4.8 Trustpilot score), next-day delivery & nurturing entrepreneurial talent. The Board is aiming ultimately lift revenues from £80.5m in FY22 (up +44% vs £56m LY) to >£500m, equivalent to a 10% market share.
Which - assuming a sustainable 8% EBITDA margin and a 10x-15x multiple - would generate a hypothetical 380p-570p/share valuation vs 95p today (or c. 12x CY EV/EBITDA).
CEO Mark Smithson commenting: ” We are well placed to seize the opportunities ahead thanks to our compelling customer proposition, low-cost operating model and focus on profitable market share growth, with more and more people from across the UK coming into contact with the Marks Electrical Group plc brand for the first time."
"As we look forward to FY23, our trading momentum has continued during the start of April, setting us up well for our FY23 financial targets.”