Coffee shop chain Caffe Nero is starting to set itself apart from its competitors after reporting a stunning set of interim figures. Chief executive Gerry Ford unveiled a like-for-like sales improvement of 4.5% in the six months to November. This means the company has now unrolled 34 consecutive quarters of such growth between two and four per cent.

The three major chains – Caffe Nero, Starbucks and Costa – now have nearly 60% of the market. Nero is growing its share of the market the fastest, with Costa declining over the past year. Nero wants to have 15% of the market within three years, up from its current 13%.

That seems eminently achievable, particularly as the chain is stepping up its programme of store openings. Nero currently has 250 stores in operation and is opening four each month. It is also now in the enviable position of being able to do so using cash generated from the business.

Ford dismisses suggestions that sites are becoming more expensive, saying Nero will only enter in short leases confident they can cover such property costs with trading. He reckons there is room for 450 stores in the UK and expects to expand further in the regions beyond London. He is also keen to start operations overseas, particularly the Middle East.

The second half has started well, with like-for-like growth up 6% in the first two months of the period. Broker Altium predicts £7.8m pre-tax profits for the full year, giving earnings of 6.7p a share. That gives a p/e of 38, which, while not cheap, reflects the strong growth prospects. Add.

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