Furnishings group grows half year profit despite slight sales slip

Interior furnishings group Sanderson Design Group PLC has reported a strong first-half licensing performance that has driven profit growth with full year trading remaining in line with expectations.

According to its Interim Results for the six months ended 31 July 2023, total sales fell 2.1% to £56.7m from £57.9m in 2022.

Adjusted underlying pre-tax profit resulted at £6.8m, up 7.9% from £6.3m against the previous period.

The group said that Brand product sales were down 4.5% in reported currency at £40.3m, impacted by trading in the UK, down 11.8% at £19.5m, which represents approximately half of brand product sales.

Commenting on the UK, the group said: “We remain focused on cost control and efficiency gains to drive margin improvements. We recently completed a reorganisation of the UK support function, which is expected to yield annualised savings of £0.6m and will benefit the second half of this year and thereafter. This reorganisation aligns the business to the lower volumes of the current consumer environment and mitigates the significant inflationary pressures of the recent past.”

As for its licensing division, it delivered an ‘outstanding performance’ with revenue up 81.6% at £6.9m.

During the period, the group secured major licensing agreements with NEXT, for Clarke & Clarke homewares, and with J Sainsbury plc’s Habitat brand with Morris & Co. and Tu brand with Scion for a wide range of products.

During the half year, third party manufacturing resulted at £9.5m, down 20.2% compared with the strong comparator last year, when customers restocked post Covid. In addition, the general consumer slowdown has reduced the requirement for repeat orders as customers have sufficient stock.

“Importantly, orders for new collections have held up well and orderbooks have further improved during the past few weeks. Going forward, the comparator for manufacturing in the second half last year is less demanding as it does not include restocking post Covid,” Sanderson said.

“Digital printing at Anstey, our wallpaper factory, has grown rapidly since the investment in a new digital printer last year. The percentage of digital wallpaper printing, compared with traditional techniques, increased to 22% of the factory’s wallpaper printing during the first half (H1 FY23: 19%) and is currently at about 25%.”

Dianne Thompson, Sanderson Design Group’s Chairman, said: “We are focused on growth opportunities in the US, where we are currently under indexed, on driving licensing income internationally and on mitigating the softness in the UK market through cost saving measures. Our licensing activities had an outstanding first half and continue to drive the Group’s profit growth in the current year.

“As we enter the key autumn selling period, we are encouraged by the high level of sampling from recent product launches, by our pipeline of licensing opportunities and by the strength of our balance sheet. The Board’s expectations for the full year remain unchanged.”

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