REG - Sanderson Design Grp - Full Year Trading Update

Sanderson DesignAnnouncement

08/02/2024 07:15

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RNS Number : 4102C  Sanderson Design Group PLC  08 February 2024

 8 February 2024

SANDERSON DESIGN GROUP PLC

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

 

Full Year Trading Update

Results in line with expectations with profitability driven by Licensing

Sanderson Design Group PLC (AIM: SDG), the luxury interior design and
furnishings group, is pleased to announce its trading update for the financial
year ended 31 January 2024.

The Group has traded in line with management expectations with the strong
growth reported in the half year results from the Group's licensing activities
and North America continuing in the second half, mitigating the challenging
conditions in the UK which persisted throughout the year.

Group sales for the year were 3.1% below the prior year at approximately
£108.5 million (FY2023: £112.0m) in reported currency, down 3.0% in constant
currency. High-margin licensing contributed more than £10 million of Group
sales for the first time at £10.9 million (FY2023: £6.5m). Licensing has
become an important strategic pillar for the Group, complementing the Group's
brands and manufacturing activities and driving profitability.

Underlying profits for the financial year ended 31 January 2024 are expected
to be approximately £12m (FY2023: £12.6m), reflecting the strong
contribution from licensing along with the impact of trading conditions in the
UK, the Group's largest market.

The Group's balance sheet remains strong with net cash of approximately £16.2
million at 31 January 2024 (FY2023: £15.4m; H1 FY24: £15.9m).

 

Brand product, manufacturing and licensing revenue

                              Year to 31 January      % Change           % Change (CER)
                                          (£ million)          FY2024 v FY2023     FY
                                                                                   20
                                                                                   24
                                                                                   v
                                                                                   FY
                                                                                   20
                                                                                   23
                              2024        2023        REP      CER       H1        H2
 Brand product
 UK                           37.9        42.6        (11.0)%  (11.0)%   (11.8)%   (10.2)%
 North America                21.2        19.8        7.1%     8.2%      5.9%      10.5%
 Northern Europe              9.9         10.8        (8.3)%   (8.3)%    (8.9)%    (7.7)%
 Rest of the World            9.7         10.2        (4.9)%   (5.8)%    0%        (11.3)%
 Total Brand product revenue  78.7        83.4        (5.6)%   (5.5)%    (5.8)%    (5.2)%
 Manufacturing
 External                     18.9        22.1        (14.5)%  (14.5)%   (20.2)%   (7.4)%
 Internal                     16.1        16.9        (4.7)%   (4.7)%    (21.6)%   19.8%
 Total Manufacturing revenue  35.0        39.0        (10.3)%  (10.3)%   (20.8)%   3.7%
 Licensing
 Total Licence revenue        10.9        6.5         67.7%    67.7%     82.9%     46.3%

 TOTAL GROUP REVENUE          108.5       112.0       (3.1)%   (3.0)%    (3.0)%    (3.0)%

 

The targeted growth market of North America performed strongly in the year,
with brand product sales up 7.1% in reported currency, up 8.2% in constant
currency. Accelerated growth in the second half was driven by Kravet Inc., the
US distributor of our Clarke & Clarke brand, and reflects increased
momentum following the renewal for five years of Kravet Inc.'s distribution
agreement, which commenced in September 2023.

Outside of North America, and as already reported, challenging market
conditions continued to impact the UK, Northern Europe and the Rest of the
World, primarily reflecting the subdued consumer backdrop.

Total licensing revenue was up 67.7% at £10.9 million (FY2023: £6.5m),
driven by accelerated income of £6.5 million (FY2023: £2.4m) from licence
agreements signed during the year, including major new deals with NEXT and
Sainsbury's along with a number of smaller deals, contract renewals and
extensions.

Renewals signed during the year include a three-year renewal with Bedeck,
which was recently extended by a further two years, and the Morris & Co.
deal with US retailer Williams Sonoma, which was recently extended by a
further year, until August 2026 with new product categories added. In
addition, Williams Sonoma's monogrammed gifting brand Mark & Graham has
recently signed a three-year agreement with the Sanderson brand for the USA
and Canada.

Third-party manufacturing, at £18.9 million, was down 14.5% (FY2023: £22.1m)
against a strong comparator in FY2023, which included restocking post-Covid,
and reflects a return to more normalised inventory requirements. Digital
printing continues to grow at Standfast & Barracks and at Anstey, where,
in light of the current consumer environment and the reduced resource
requirement of digital printing, a review of the cost base is ongoing.

 

Outlook

Licensing has become a significant strategic pillar for the Group whilst,
geographically, North America continues to be a key growth market. We intend
to focus on these two growth drivers and also take advantage of any other
international growth opportunities.

Whilst trading conditions are expected to remain challenging in the UK and
Europe, at this early stage of the current financial year ending 31 January
2025 the Board's full year revenue outlook remains unchanged. Certain cost
pressures are expected, including the increase in the Real Living Wage and
property-related costs, such that profitability in the current financial year
is expected to be similar to that of the year ended 31 January 2024.

The Group continues to benefit from the strength of its balance sheet,
including a strong net cash position. In addition, the Group's banking
facility with Barclays Bank PLC was renewed on 1 February 2024 for a further
five years, comprising a £10 million revolving credit facility and an
uncommitted £7.5 million accordion to provide further flexibility if needed.

The Group has a strong pipeline of product initiatives in the year ahead,
including the strategic focus on the Sanderson brand. Giles Deacon's capsule
collection of Sanderson designs has just been launched, and last year's
successful launch of the Disney Home x Sanderson collection brings further
potential in the current year.

The Group's full year results, including a detailed update on outlook, are
expected to be announced in April 2024.

 

 

For further information:

 Sanderson Design Group PLC                                   c/o Buchanan +44 (0) 20 7466 5000
 Lisa Montague, Chief Executive Officer
 Mike Woodcock, Chief Financial Officer

 Investec Bank plc (Nominated Adviser and Joint Broker)       +44 (0) 20 7597 5970
 David Anderson / Ben Farrow

 Singer Capital Markets (Joint Broker)                        +44 (0) 20 7496 3000
 Tom Salvesen / Jen Boorer / James Todd

 Buchanan                                                     +44 (0) 20 7466 5000
 Mark Court / Sophie Wills / Toto Berger / Abigail Gilchrist
 SDG@buchanan.uk.com (mailto:SDG@buchanan.uk.com)

 

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
(http://www.sandersondesigngroup.com)

 

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