Once again, UK coffee house operator Caffe Nero has brewed up record full year figures to the end of May, beating a second upgrade from analysts, and chairman Gerry Ford is now casting his gaze overseas.



Pre-tax profits frothed up by 156% to £5.6m at the 230-strong chain last year, as sales grew 39% to £70.1m. Earnings per share rocketed up by 100% to 7.49p. Encouragingly, like-for-like store sales were up 7.5%, with Caffe Nero now having recorded 32 consecutive quarters of positive like-for-likes.


‘We opened a net 52 new stores last year,’ explained Ford, ‘and grew operating profits by 155%, whilst maintaining our number one ranking with consumers.’ Ford says there’s plenty to play for in a £2.2bn UK coffee bar market, the fastest part of which is the branded area – of which Caffe Nero has 12% – forecast to grow by more than 10% a year for the next few years.


Caffe Nero also announced sales up 34% during the first quarter, despite the London bombings and consumer slowdown. Even though the central London stores were affected by the terrorists outrages, they still traded ahead of last year. Ford, who is planning 41 new UK stores this year, is also looking into a push overseas, namely Northern Europe and the Middle East. ‘We’ll go overseas in a pragmatic fashion,’ he explained, ‘if you chase all over the place, you will get burned.’ Upgraded forecasts for 2006 suggest earnings of 6p per share on pre-tax profits of £7.2m, for a forward multiple of 35.75, which is probably deserved. Buy.