WickedLester wrote:they have a cost advantage over clinton's as they make their own cards. i acknowledge it's not a blockbuster of a business, but 20% operating margins and 16% ROIC puts it in the top 5-10% of retailers in the UK. i'm not sure what clinton's figures are but it won't be near that.
Well just playing devils advocate but do you think they'll be able to maintain those excellent margins into the future? I can't imagine there is any "moat" around this business and I can't imagine it being hard to replicate the business model. In fact I notice from the recent trading update that EBITDA is down on last year and margins are under pressure despite opening 50 new stores so it's not really growing anymore.
I can imagine their margins getting competed down to a more reasonable level. Greggs' margins appear to be much more reasonable and sustainable.
it's not really economical to ship the sort of stuff they sell over the internet, so i don't see much threat there. the main threat would probably come from supermarkets and other bargain shops, since i doubt a direct rival will pop up given that it is not in a growth industry. the prices are very low, and it's only possible to make these margins by making the stuff themselves.
clearly retail is a tough industry, hence why i haven't been willing to invest. there are very few retailers i can think of with a durable moat - costco, walmart, inditex spring to mind.
