Furnishings group posts sales dip; Licensing and US deliver growth

Interior furnishings group Sanderson Design Group PLC has reported a reduction in full year sales but remained in line with expectations.

According to its latest trading update for the financial year ended 31 January 2024, total group sales declined 3.1% to £108.5m from £112m in 2023.

UK sales were down 11% to £37.9m from £42.6m, while US revenues rose 7.1% to £21.2m from £19.8m. Sales in Northern Europe fell 8.3% to £9.9m, while rest of the world revenues dipped 4.9% to £9.7m.

Manufacturing sales declined 10.3% to £35m, while its Licensing division saw an increase of 67.7% to £10.9m year-on-year.

Underlying profits for the financial year 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.

Commenting on its performance, Sanderson said: “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.

“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.

“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.

“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.

“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.”

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