Carluccio's BUY-Carluccio's Plc (Public, LON:CARL)

Expanding Italian restaurants concern Carluccio’s is worth considering on the resilience of its recent trading as well as future possible bid excitement.

Floated on AIM in 2005, Carluccio’s, the UK-based group of authentic Italian restaurants with integrated food shops, recently informed investors trading across its stores performed ahead of expectations during the half ending 28 March.

Turnover was 8% up on the £34.5m top line figure delivered last year, meaning that in May, when the figures are officially served up, investors can expect first half pre-tax profits ‘moderately ahead’ of the £2.5m baked up by Carluccio's last time out.

Carluccio’s, whose backers include celebrated restaurants tycoon Richard Caring as well as institutions Standard Life and BlackRock, cooked up this modest growth despite recession, new minimum wage legislation and a higher VAT rate. The board attributes this robustness to the flexibility of the business model, combining all-day trading with a low average spend of £13 per head in each store.

Meanwhile, the group continues to expand, having opened three new stores, all performing better-than-expected, in Exeter, Cardiff and Wimbledon in the half, taking the total to 45 stores nationwide. A new store opens in Milton Keynes this summer. Overseas, Landmark, the company’s Middle Eastern franchisee, has opened its second Carluccio’s in Dubai, with third and fourth locations expected to open by the end of the year.

Carluccio’s, which generated adjusted pre-tax profits of £4.7m (2008: £5.6m) on increased sales of £69m in a testing year to September, is a highly robust, strongly cash generative business which received a bid approach last May (thought to be from a private equity player) that eventually came to nothing.

In our opinion, the dividend-paying shares, whilst trading on a punchy prospective multiple, are worth buying for growth and the potential Carluccio’s could be put back into play.