Stanley Gibbons 'hopeful' as trading remains difficult

Stanley Gibbons Group updated the market on its trading on Thursday, reporting that the patterns seen in the first half of its financial year had continued, including increased levels of digital activity and remote selling of albums and accessories, compared to lower levels of high-ticket sales and in person activities as a result of lockdown restrictions .

The AIM-traded philatelic dealer and retailer said that while the patterns had been consistent, underlying trading was better than in the first half.

It said that although the philatelic part of its business remained challenging there had been more “less bad” months recently, and it was able to complete a “very significant” trade transaction of old stock towards the end of 2020.

The main aspects impacting that part of the business were challenges with sourcing new material, the lack of exhibitions which often boosted higher-end sales, and the overall impact on the auctions business, which was skewed towards its physical location.

Stanley Gibbons said its publishing business had benefited from what it believed were “significant” market share gains, as well as hobbies as a whole benefitting through the restrictions imposed on everyday life.

That was partially offset by a failure to produce one of its annual catalogues towards the end of 2020, the board said.

“We continue to work on developing the digital elements of the business, something which has proven challenging at times but is increasingly giving us cause for optimism about the future,” the directors said in their statement.

“We are also extremely conscious that a lot of customers in this part of the business do not deal with our philatelic department, something we are working to address.”

Although challenged by its inability to open the shop, the company said its Baldwin's numismatic operation had continued to trade “reasonably well” through recent months, acquiring some “good material” helped by a strong underlying market.

After a four-year partnership with St James' Auctions, it had jointly agreed to terminate its coin auction joint venture early, at the end of April, at no cost.

“This is a major milestone in the development of Baldwin's and we are very excited to be able to bring coin auctions back in house after a four year hiatus.”

Stanley Gibbons said the shop itself had remained closed for some time, and even when it was permitted to open, central London was “particularly quiet”.

“This is extremely frustrating having completed the redevelopment project and created what we believe is an unrivalled destination for those interested in our hobbies.”

The Stanley Gibbons board said it was “hopeful” that a vaccine-led relaxation of restrictions was not only permanent, but encouraged activity levels to return at pace, although that was hard to predict and it did have plans if that was not the case.

On the financial front, the company said its primary creditor and majority shareholder had remained “extremely supportive and engaged”, given their willingness to again waive the loan covenants which it was in default of.

The board said it had now received written confirmation of that waiver, adding that the next financial covenant test of its loan facilities were in March 2022.

It added that it was continuing to have a “constructive dialogue” with the pension scheme trustees and its landlords and lessors, with agreements in principle made for lease amendments on both of the properties it actively operated from, and a reallocation of the lease to its sub-tenant for the third UK location.

In November, the board said it expected the company to draw down the remaining £2m of its loan facility within the next 12 months, but it said on Thursday that it hoped that was now “too conservative”.

It did note, however, that the business was still cash negative, while trading conditions and the impact on the company’s longer-term funding position remained uncertain, with the latter influenced by negotiations with its long-term creditors.

“It is almost a year to the day that we prepared a plan for what we should expect as a result of the newly-introduced coronavirus restrictions,” said group chief executive officer Graham Shircore.

“At that time we would never have considered still being in lockdown 12 months later and we were similarly amiss in our financial assumptions.

“Our initial estimates were that we would have to draw down further on our debt facility by May of last year.”

Shircore said that, despite increasing its spending on those initiatives which would help “propel the business forward” in future years, it was yet to do so.

“This achievement is down to how our colleagues responded to the crisis and it is something I am extremely proud of.

“It allowed us to shift our focus far more heavily to coming out of the crisis relatively stronger than we went in and while we have undoubtedly been financially impacted by Covid-19, I am also confident that this is the case.”

Shircore said the company was hopeful that the relaxation of restrictions, combined with greater participation in the hobbies it served, boded well for the firm’s prospects.

“However we are under no illusion that this is guaranteed and it is incumbent upon us to shape our own future, during these uncertain times.

“We must redouble our efforts in order to reap the benefits of the progress we have made, we cannot afford to take our foot off the pedal.”

At 1333 BST, shares in the Stanley Gibbons Group were down 6.45% at 2.9p.