Luxury interior design and furnishings group, Sanderson has reported its trading update for the six months ending 31 July.
A strong performance in the half year from the group’s licensing activities and encouraging growth in the US have mitigated the difficult market conditions in the UK (which the company discussed during its AGM statement in June).
Group sales in the six-month period of £56.7 million (comprising brand product and external manufacturing sales, along with licensing revenue) were down 2.1% in reported currency compared with the same period last year (H1 FY23: £57.9m), down 3.0% on a constant currency basis.
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 (H1 FY23: £6.3m).
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.
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.
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. 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.
Focus remains on the significant international growth opportunity in the US market and the growing pipeline of licensing opportunities, both of which will underpin trading in H2 FY24 and beyond.
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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