Unlike some of its competitors, Caffe Nero has proved that listed coffee bars can successfully expand and still be run profitably. In a recent trading statement, the Italian-style coffee bar operator announced a strong trading performance in the second half of the year with like-for-like sales up by high single digits. Although high street retailers are feeling the pinch of consumers shutting their purses, Caffe Nero stated that revenues for the year to May will be at the top end of analysts' forecasts and profits will be materially higher than market expectations. In response, broker Teather & Greenwood upgraded its pre-tax profit forecast for the group by £200,000 to £5.1m. Commenting that Caffe Nero is still 'very much a growth business' and that the coffee bar market in the UK is 'under-developed', T&G believes the company can expand from its current 210 units to 400-500 branches with an opportunity to also move into Europe. But, T&G thinks the prospective p/e of 33.75 too pricey to buy into the shares. we agree. Hold.

People who read this article also read ...
Caffe Nero	09/02/2006
Caffe Nero	14/09/2005
Electric Word	09/06/2005
New products aplenty	01/06/2005
Ford's halfway coffee house	01/03/2005