REG - Portmeirion Group - Trading Update

PortmeirionAnnouncement

13/12/2024 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241213:nRSM9452Pa&default-theme=true

RNS Number : 9452P  Portmeirion Group PLC  13 December 2024

 

 

 

13 December 2024

 

PORTMEIRION GROUP PLC

('the Group')

 

Trading update

 

 

Portmeirion Group PLC, the owner, designer, manufacturer and omni-channel
retailer of leading homeware brands in global markets, provides an update on
its trading position ahead of its year end on 31 December 2024.

 

Summary

 

·    FY24 revenue now expected to be circa £90 million and accordingly
profit before tax is expected to be £1.0 million. This is below market
expectations due to:

o  supply delays in key Christmas period following previously flagged supply
chain disruption from Asia and recent shipping disruption into the US due to
port strikes;

o  continued destocking in South Korea; and

o  challenging and unpredictable market conditions, exacerbated in recent
months by uncertainty in the lead up to significant political events in some
of our key markets.

·    Despite short term challenges, the Group remains confident in the
medium-term outlook.

 

Trading update

 

Markets have remained challenging and unpredictable during the second half of
the year. For the reasons set out below the Group now expects sales for the
year to be below market expectations at circa £90 million, which reflects
second half sales down 7% on a like for like basis.  As a result, profit
before tax is expected to be £1.0 million for the full year.

 

With the Group's strong second half sales and profit weighting, Q4 is always a
key trading period. Both the UK and US markets have been impacted by political
and macroeconomic developments, which have been further compounded by ongoing
supply chain and shipping disruption into the US delaying product deliveries
in time for key holiday sales periods.  This has led to, in some cases, order
withdrawal and lower replenishment orders, coupled with increased costs.
Whilst consumer demand and pull through in both regions were up across the key
Thanksgiving / Black Friday holiday period, overall sales and replenishment
across October and November 2024 were below the Group's expectations.

 

We expect overall sales in our US division to be down 6% in 2024, but net
profitability to be higher as a result of a lower cost base and the work
undertaken earlier in the year to improve gross margins (notwithstanding the
increase in container shipping and remedial air freight costs). We see
potential for further increases in US market gross margins in 2025 aided by
easing of supply chain disruptions.

 

As previously reported, sales in the Group's South Korean region have been
impacted by weak consumer confidence and continued destocking. Whilst higher
stock levels of existing ranges have dissipated somewhat, the market remains
challenging as consumers continue to deal with higher inflationary pressures,
interest rates and weaker currency.  As a result, the Group's South Korea
sales are taking longer to recover than anticipated and in the second half of
2024 are now expected to be down 13% on last year (H1 2024 down 60%).

 

Sales in our home fragrance division, Wax Lyrical, have continued to grow
strongly driven by new listing wins in the Grocery channel and we expect FY
sales to be up over 25% on 2023 with improved levels of profitability.

 

Excluding South Korea, Group sales are expected to be down in H2 by 6% and
full year sales to be down circa 3% on the prior year at constant currency.

 

Outlook

 

Whilst the Group expects the near-term market outlook to remain uncertain, in
the US we are encouraged by the growing consumer demand for our Spode ranges
and given the work we have already started to build further contingency into
production and supply chain timings, sales are therefore expected to rebound
in 2025.  We see good potential in the medium and long term for growth driven
by the progress we have made in expanding our online and physical store
distribution channels.

 

In Korea, we have taken action to reduce over stocks through simplifying our
routes to market, have accelerated new product launches to reinvigorate short
term distributor orders and are confident that sales will continue to grow
strongly on online platforms. As a result of actions we are taking we are
expecting an improvement in 2025.

 

Our Wax Lyrical business has good growth momentum following the new strategic
focus on the Grocery channel, supported by a strong product proposition and
excellent service levels. We expect this momentum to continue.

 

Mike Raybould, Chief Executive, commented:

 

"Consumer confidence and spending levels remain challenging across our key
markets of the US, Asia and UK. In South Korea, we have made progress in
reducing high stock levels, but weak consumer and retailer confidence continue
to impact trading in this region. Amidst challenging macroeconomic conditions
we are encouraged by ongoing growth in online platforms with online data
showing our ranges are retaining their strong market share position.

 

We took action at the start of the year to reduce our overhead base by circa
£4 million (circa 10%) which will give us a leaner cost base from which to
grow profits as consumer markets improve. The impact of lower sales in South
Korea and the resulting lower utilisation of our UK tableware factory has had
an adverse impact on 2024 profitability, excluding which, overall Group net
profitability would be significantly up on 2023.

 

We are also pleased to see the ongoing improved performance in our Wax Lyrical
division. We are excited about the medium and long term opportunity across our
portfolio to grow sales in ROW international sales markets and believe the
market share gains and new listings won in the US over the last 3 years will
allow sales in these markets to rebound as consumer confidence returns.

 

We believe in the strength of the underlying consumer demand for our brands
and the opportunity to further leverage them across all markets. Demand for
our Spode brand continues to grow across key markets, including the US,
reflecting the focus on new product, expanding distribution of our well known
'Spode Christmas Tree ' range and online marketing. We are delighted with the
success of our recent 'Blue & White Christmas' campaign featuring Jack
Kinsey, a local interior designer, whose Instagram reels have already amassed
over 8 million views since launch a few weeks ago.  Spode sales are already
up over 35% over pre Covid levels and we see great opportunity for strong
future growth over the coming years.

 

Whilst we expect the near-term market outlook to remain uncertain, we continue
to focus on what we can control and are confident we can further strengthen
our business model and ability to maintain and grow market share across our
key markets."

 

 

Notes:   This announcement contains inside information for the purposes of
the retained UK version of the EU Market Abuse Regulation (EU) 596/2014 ("UK
MAR").

 

ENQUIRIES:

 

 Portmeirion Group PLC:
 Mike Raybould, Chief Executive          +44 (0) 1782 743 444   mraybould@portmeiriongroup.com
 Jon Hill, Group Finance Director        +44 (0) 1782 743 444   jhill@portmeiriongroup.com

 Hudson Sandler:
 Dan de Belder                           +44 (0) 207 796 4133   portmeirion@hudsonsandler.com
 Nick Moore

 Emily Brooker

 Shore Capital:                          +44 (0) 207 408 4090

 (Nominated Adviser and Joint Broker):
 Patrick Castle                          Corporate Advisory

 Lucy Bowden
 Malachy McEntyre                        Corporate Broking

 Isobel Jones

 

 Singer Capital Markets

 (Joint Broker):         +44 (0) 207 496 3000
 Peter Steel             Investment Banking
 Asha Chotai

 

NOTES TO EDITOR:

Portmeirion Group PLC is a leading, omni-channel British ceramics manufacturer
and retailer of leading homeware brands.

 

Based in Stoke-on-Trent, United Kingdom, the Group owns six unrivalled
heritage and contemporary brands, with 750+ years of collective heritage;
Portmeirion, Spode, Royal Worcester, Pimpernel, Wax Lyrical and Nambé.

 

The Group serves markets across the world, with global demand driven by
diversified international markets including the key geographies of the US, UK
and South Korea.

 

Portmeirion Group has a proven capital-light, well developed and self-funded
growth strategy focused on building a wider customer base and growing the
sales footprint of its brands, through:

·    Building and growing international sales markets

·    Developing online sales channels in core markets

·    Designing and launching new product to widen appeal and take market
share

·    Leveraging brands and extensive product ranges

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTUUUKRSKUUAAA