December 10, 2018

SPS/A Sportscene Group Inc

 

 

Sportscene Group Inc. (SPS) is a niche chain of themed sports bars.  They are operating exclusively in Quebec and began in 1984.  The chain officially goes by the brand name of La Cage aux Sports.  At last count, there were 52 locations of La Cage aux Sports.  Sportscene Group wholly or jointly owned 38 of these locations, while the remaining 14 were franchisee-ran.  The restaurant/sports bar’s motto is, “Sports, Gang, Fun.”  They have embraced the modern sports bar image and emphasize big screen televisions and special events in order to attract to patrons.  In order to supplement their usual offerings, La Cage aux Sports has begun to put on big name events including professional boxing matches and other athletic endeavors.  There are three main divisions within the Sportscene Group (SPS).  The first is the core business – the restaurant and sports bar business which generates over three quarters of the company’s overall revenues.  The second segment includes the operation and management of the real estate properties that the company controls.  Finally, the third main division within SPS revolves around the revenues generated by staging complementary activities (usually sports related).

 

During the 2011 fiscal year, the Sportscene Group reported that they have continued to face headwinds in their fight for Quebecer’s leisure spending.  The year seen the renovation of several La Cage aux Sports locations, the opening of a new corporate location, and a new Franchisee addition as well.  These new additions to the Sportscene (SPS) portfolio led the company to experience a 4.1% overall rise in revenues despite a 2.2% decline in network sales.  Total sales numbered just under $108 million for the year, and earnings of $3.9 million.  Jean Bedard, the President and CEO of the company recently stated, “Sportscene Group’s financial performance over the past few years attests to its ability to adapt to new spending trends and to evolve in a challenging business context in a disciplined, proactive and profitable manner. We are determined to meet the challenges and opportunities that will arise in the coming quarters with the same openness and creativity, in order to maximize benefits for our organization and shareholders,”

 

In 2012 the Sportscene Group (SPS) looks to focus on three primary objectives.  The first is to grow through external expansion.  Two new La Cage aux Sports locations are planned for 2012 and another corporate Cage is in the works as well.  The company will also look to expand is partnerships and interests in complementary activities, especially though InterBox and its sports complex.  Secondly, to grow same store sales growth as profit margins expand for the restaurant chain.  This growth will be driven by new menu additions and capitalizing on its unique advantage in terms of hosting sporting events.  Finally, the Sportscene Group (SPS) hopes to continue refining its best practices in a bid to raise overall efficiency and profitability.

 

Shares of the Sportscene Group recently close around $8.80.  This is down significantly from the 52-week high of $12.50, and close to the low of $8.05.  The company is very small and has a market capitalization of $36.68 million.  It’s annual dividend of $0.60 gives the share a dividend yield of 6.8%.  I don’t like the overall investing climate of Quebec right now.  Its market prospects don’t look good, and I don’t like the idea of investing in such a geographically concentrated business.  Especially when that geographic location is going through tough economic times and the business relies on leisure spending; therefore, I would definitely recommend not buying this stock at the current time.

 

 SPS/A Sportscene Group Inc Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioINDUSTRY_SUBGROUPDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
SPS/ASportscene Group Inc11.755.1159.37Retail-Restaurants0.18319113.713730