Furnishings group remains cautious about UK market

Interior furnishings group Sanderson Design Group has reported a decline in half year sales with the UK market down almost 12%.

According to its latest trading update for the six months ended 31 July 2023, total sales fell 2.1% to £56.7m from £57.9m against the same period last year.

UK sales slipped 11.8% to £19.5m from £22.1m, while EU sales fell 7.3% to £5.1m from £5.5m. North America sales rose 10.3% to £10.7m from £9.7m.

Commenting on its performance, the group said: “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 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’s £6.3m.

Looking ahead, the group said it 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 added.

“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.”

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