Sanderson Design tumbles on profit warning
By Michele Maatouk
Date: Thursday 27 Jun 2024
(Sharecast News) - Sanderson Design tumbled on Thursday as it warned on profits, citing deteriorating trading conditions in the UK.
The AIM-listed interior design and furnishings company now expects trading in the current financial year to be below its earlier expectations. Underlying pre-tax profits for the year ended 31 January 2025 are set to be around £8m. This is down from £12.2m a year earlier and a consensus forecast of £10m.
Sanderson said that since its full-year results in April, trading in the UK - its largest geographic region - has deteriorated, impacting brand product sales in May and June.
For the first 22 weeks of the current financial year, total brand product sales were down 9% compared with the same period last year. In the UK, brand product sales were 14% lower, "reflecting the worsening of market conditions," it said.
"The shortfall in revenue has a particular impact on profitability in the current financial year owing to the previously communicated inflationary pressures that the business is absorbing," it said.
North America, the company's strategic growth market, and Licensing have both continued to trade in line with board expectations, Sanderson said.
Manufacturing is performing in line with the same period last year, which is slightly below expectations. The company said lower manufacturing volumes, due to lower brand product sales, have impacted the cost recovery in manufacturing.
In light of current trading conditions, Sanderson is accelerating its programme of strategic initiatives.
"As part of this programme, a review was recently launched of the end-to-end cost to serve in the UK, with the objective of delivering a more efficient model," it said. "Opportunities for further cost savings have also been identified, including the reduction of capital expenditure and discretionary spend, as part of an ongoing cost control exercise.
"The group continues to benefit from a strong cash position, which serves to protect the group in the current subdued consumer environment."
At 1220 BST, the shares were down 18.8% at 83.20p.
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