Full Year Trading Update
Full year sales down 3.1% to £108.5m; licensing surged 67.7% to £10.9m; underlying profit £12m.
vs expectations: in line
- Group sales £108.5m (prior £112.0m)
- Licensing revenue £10.9m (prior £6.5m)
- Underlying profit £12m (prior £12.6m)
- Net cash £16.2m (prior £15.4m)
- North America brand product sales £21.2m (prior £19.8m)
- UK brand product sales £37.9m (prior £42.6m)
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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 | FY2024 v FY2023 | ||||
| 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.
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