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Summary
- Sanderson Design Group Plc had reported a revenue contraction of 14.6% for the ten-months period ended on 30 November 2020.
- The sales of the Company had witnessed a significant rise of around 7% for the nine-week key selling period in October and November 2020.
- The licensing income fell by 59.4% to £1.3 million during H1 FY20.
- The Company had available banking facilities of £19.5 million as of 31 July 2020.
Sanderson Design Group Plc (LON:SDG) is the LSE listed consumer discretionary stock. Based on 1-year performance, shares of SDG have generated a return of 12.50%. Shares of Sanderson Design Group Plc were up by close to 0.31% from the last closing price (as on 23 December 2020, before the market close at 08:35 AM GMT).
Sanderson Design Group Plc is the FTSE AIM All-Share listed Company, the leading luxury interior design and furnishing group. The Company made licensing revenue from the use of its designs on a wide range of products. The Company employs around 600 people, and its products are sold in almost 85 countries worldwide. The Company was earlier named as Walker Greenbank PLC.
Upcoming Events – The Company will announce its trading update of full-year ending 31 January 2021 in mid-February 2021.
Business Model
The main brands of the Company include -
- Zoffany
- Sanderson
- Morris & Co.
- Harlequin
- Scion
- Anthology
- Clarke & Clarke
- Studio G
The brand sales include licensing income derived from the brands and global trading from overseas operations in the US, France, Russia and Germany.
(Source: Company website)
The Company has two key manufacturing sites constituting Anstey wallpaper factory in Loughborough and Standfast & Barracks, a fabric printing factory located in Lancaster. The Company has its showroom in London, New York, Chicago, Paris, Amsterdam and Dubai.
Trading Update (for the ten-months period ended on 30 November 2020 as on 21 December 2020)
- The revenue of the Company was contracted by 14.6% for the ten-months period ended on 30 November 2020, while it was plunged by 30.6% during the six months period ended on 31 July 2020.
- The sales of the Company had witnessed a significant rise of around 7% for the nine-week key selling period in October and November 2020, from the equivalent period of the prior year. The profitability was also benefitted due to stringent cost reduction measures incorporated by its management.
- The wallpaper and fabric factories manufacturing division are running at similar levels of the last year.
- The balance sheet of the Company is robustly reflected by a strong cash position and adequate liquidity compared to the six-months period ended on 31 July 2020.
Recent News
On 11 December 2020, the Company had updated that its proposed name change to Sanderson Design Group plc had now taken place at Companies House. The trading under this name will commence from 11 December 2020, 8:00 AM.
On 20 November 2020, the Company had announced an innovative collaboration to add an online shop under the Scion brand. This online shop will sell the brand’s products directly to customers under a franchise agreement with Design Online Limited. The franchise agreement will have an initial term of five years and low capital investment by the Company.
H1 FY20 results (ended 31 July 2020) as reported on 14 October 2020.
(Source: Company result)
- The revenue of the Company declined by 30.6% to £38.8 million during H1 FY20 from £55.9 million for H1 FY19 due to temporary closure of manufacturing sites and an adverse impact of UK and international lockdowns.
- The adjusted underlying profit before tax went down significantly to £0.4 million during H1 FY20, while it was £4.9 million during H1 FY19.
- The Company had obtained £3.2 million furlough grants from the UK and US governments through the Coronavirus Job Retention Scheme (CJRS).
- Regarding the financial position, the Company’s net debt was reduced to £2.6 million as of 31 July 2020 from £7.7 million as of 31 July 2019.
- On the liquidity front, the Company had available banking facilities of £19.5 million as of 31 July 2020, compared to £13.8 million at 31 January 2020.
- The Company had not announced any interim dividend as of yet.
Segmental Revenue Analysis
(Source: Company result)
- The brand sales went down by 30.2% to £15.5 million during H1 FY20 in the UK, which is the largest market of the Company. The drop was minimal in Northern Europe driven by the strength of the Morris & Co. brand in Scandinavia. North America segment went down by 33.3% during H1 FY20.
- The licensing income fell by 59.4% to £1.3 million during H1 FY20 due to the recognition of fixed minimum guaranteed licensing income in the comparable period.
- Manufacturing sales went down by 38.5% to £10.5 million during H1 FY20 due to both manufacturing businesses remained temporarily closed in March 2020, and hence, the Company had lost almost £7 million of revenue.
Share Price Performance Analysis of Sanderson Design Group Plc
(Source: EODHD/Others, chart created by Kalkine group)
Shares of Sanderson Design Group Plc were trading at GBX 85.50 (as on 23 December 2020, before the market close at 08:35 AM GMT). SDG's 52-week High and Low were GBX 91.75 and GBX 22.00, respectively. Sanderson Design Group Plc had a market capitalization of around £60.69 million.
Business Outlook
The Company is expecting its full-year profit before tax to remain significantly ahead of its expectations. The strong liquidity position ensures that the Company is well equipped to tackle several business challenges and operational headwinds thrown by the Covid-19 pandemic for the remaining part of this financial year. However, the Company is cautious of its uncertain trading outlook. The Company had witnessed good trading session during October and November 2020 reflecting strong demand in home improvement and furnishing sector, having consumers spending a chunk of their savings on their homes during Covid-19 pandemic. The Company is quite upbeat regarding its long-term prospects and focusing more on improving its liquidity and cost reduction.
