Half Year Trading Update

Sanderson Design Group PLC

08 August 2023

 

8 August 2023

SANDERSON DESIGN GROUP PLC

("Sanderson Design Group", the "Company" or the "Group")

Half Year Trading Update

Strong performance from licensing underpins half year profitability

Company remains on track to meet the Board's full year profit expectations

Sanderson Design Group PLC (AIM: SDG), the luxury interior design and furnishings group, is pleased to announce its trading update for the six months ended 31 July 2023.

A strong performance in the half year from the Group's high-margin licensing activities and encouraging growth in the US have mitigated the difficult market conditions in the UK discussed in the Company's AGM statement on 22 June 2023.

Group sales in the six-month period of £56.7 million (comprising Brand product and external Manufacturing sales along with licensing revenue) were down 2.1% in reported currency compared with the same period last year (H1 FY23: £57.9m), down 3.0% on a constant currency basis.

The strong contribution from licensing means that adjusted underlying profit before tax for the half year is expected to be slightly ahead of the same period last year (H1 FY23: £6.3m).

Brand product, manufacturing and licensing revenue

	Six months to 31 July (£ million)		Change (%)
	2024	2023	Reported	Constant currency
Brand product
UK	19.5	22.1	(11.8%)	(11.8%)
North America	10.7	9.7	10.3%	5.9%
Northern Europe	5.1	5.5	(7.3%)	(8.9%)
Rest of the World	5.0	4.9	2.0%	0.0%
Total Brand product revenue	40.3	42.2	(4.5%)	(5.8%)
Manufacturing
External	9.5	11.9	(20.2 %)	-
Internal	7.6	9.7	(21.6%)	-
Total Manufacturing revenue	17.1	21.6	(20.80%)	-
Licensing
Total Licence revenue	6.9	3.8	81.6%	-
Total revenue	56.7	57.9	(2.1%)	(3.0%)

Brand product revenue in the first half was impacted by the challenging UK market, which represented approximately 48% of total brand product revenue. The targeted growth market of the US continued to perform well, with sales up 10.3% in reported currency. The Rest of the World market benefited from an increasing number of contract sales to the hospitality market in the Middle East.

Third-party manufacturing at £9.5 million was down 20.2% compared with the strong comparator last year (H1 FY23: £11.9m), when customers restocked post Covid, and reflects a return to more normalised trading conditions. Repeat orders were down in the first half this year both from third-party and Group brands, although orders for new collections have held up well.

Licensing performed strongly in the first half with total licensing revenue up 81.6% at £6.9 million (H1 FY23: £3.8m), driven by accelerated income of £4.9 million (H1 FY23: £1.9m) from recently signed licence agreements.

Major new licensing deals were signed with NEXT and Sainsbury's in February and March 2023 respectively and a considerable number of licence renewals were also agreed, underlining the strength of our licensing relationships. Sangetsu has recently launched Morris Chronicles in Japan, a collection of Morris & Co. fabrics, wallpapers and floor coverings, and, this autumn, the Company will launch the Disney Home x Sanderson collection of vintage-inspired fabrics and wallpapers. 

The Company has recently streamlined its UK support function, which is expected to yield annualised savings of £0.6 million whilst maintaining a high level of customer focus.

Balance sheet

The Group's balance sheet remains strong with net cash of approximately £15.9 million as at 31 July 2023 (H1 FY23: £15.0m), compared with £15.4 million on 31 January 2023.

Outlook

As expected, recent consumer trends in the UK have persisted, however, the Group continues to benefit from significant brand strength and an increasingly diverse product range and geographical reach. This has helped deliver a robust Group performance and, in particular, a strong contribution from our high-margin licensing activities, which has underpinned profitability in the first half.

The Group remains cautious about the UK economic environment and is committed to taking mitigating actions where necessary whilst also maintaining momentum in delivering its strategic objectives.

Focus remains on the significant international growth opportunity in the US market and the growing pipeline of licencing opportunities, both of which will underpin trading in H2 FY24 and beyond. 

The Group continues to benefit from a strong balance sheet and, whilst the outlook is uncertain, the Board's expectations for the Group's full year profits remain unchanged.

Notice of Results

Sanderson Design Group expects to announce its interim results for the six months ended 31 July 2023 on 11 October 2023.

For further information:

Sanderson Design Group PLC	c/o Buchanan [phone]
Lisa Montague, Chief Executive Officer
Mike Woodcock, Chief Financial Officer
Investec Bank plc (Nominated Adviser and Joint Broker)	[phone]
David Anderson / Alex Wright / Ben Farrow
Singer Capital Markets (Joint Broker)	[phone]
Tom Salvesen / Jen Boorer / Alex Emslie
Buchanan	[phone]
Mark Court / Toto Berger / Abigail Gilchrist
[e-mail]

Notes for editors:

About Sanderson Design Group

Sanderson Design Group PLC is a luxury interior furnishings company that designs, manufactures and markets wallpapers, fabrics and paints. In addition, the Company derives licensing income from the use of its designs on a wide range of products such as bed and bath collections, rugs, blinds and tableware.

Sanderson Design Group's brands include Zoffany, Sanderson, Morris & Co., Harlequin, Clarke & Clarke and Scion.

The Company has a strong UK manufacturing base comprising Anstey wallpaper factory in Loughborough and Standfast & Barracks a fabric printing factory, in Lancaster. Both sites manufacture for the Company and for other wallpaper and fabric brands.

Sanderson Design Group employs approximately 600 people, and its products are sold worldwide. It has showrooms in London, New York, Chicago and Amsterdam.

Sanderson Design Group trades on the AIM market of the London Stock Exchange under the ticker symbol SDG.

For further information please visit: www.sandersondesigngroup.com

 

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