MINNOW: Angling Direct and Fishing Republic battle it out on AIM

Mark Shapland
Angling Direct provides the perfect Market Minnow

Fishing is big business. Forget football, golf, gardening or DIY - stats show that angling is this nation’s number one pastime, with three million people spending more than £3 billion a year.

For investors who want a piece of the action, Angling Direct, provides the perfect Market Minnow. The UK’s biggest fishing equipment seller had humble beginnings, a single tackle shop in the Norfolk Broads, but now boasts more than 21 stores with two more opening in Guildford and Peterborough this year. The firm has strong online sales, accounting for 41% of revenues.

It floated on AIM last July and its maiden results last week were impressive. Revenues soared 44% to £30 million in the year to January, although profits fell by about 75% to £159,000 after it spent £730,000 on the float. “We had to pay the brokers,” quips chief executive Darren Bailey. The firm raised £9 million, which it used to fund takeovers of three rivals. Analysts believe it is in prime position to consolidate the industry, currently made of 1800 privately owned shops.

Tom Callan at Cenkos says: “A well-progressed pipeline of new store openings, coupled with sustained investment in e-commerce infrastructure and robust store sales growth, continues to position the group well for increased market consolidation. While the share price has performed well, the sales valuation materially undersells a compelling buying opportunity.”

But Angling Direct is not the only listed fishing equipment company on the market. Fishing Republic, which floated on AIM in 2015 and is backed by ex-Tesco boss Sir Terry Leahy, has had a torrid 12 months, including a profit warning. Sales fell sharply at the back end of the fishing season as rivals cut prices in a bid to hold market share.

In January, FR was forced to raise £1.3 million through a share placing to fund a restructuring and support its e-commerce operations. Its problems show how the rise of Amazon and eBay could damage Angling Direct and Fishing Republic’s business models in the long term as anglers head to these platforms for cheap products.

Angling Direct said that, should the pressure persist, it would consider using Amazon to sell consumables, such as bait, but for now its priority to develop and grow its own online sales.

Ignoring Amazon for now, Fishing Republic and Angling Direct are pursuing the same strategy of consolidating a fragmented market place. There’s only room for one winner.