Second half trading underpins result for Sanderson Design Group

The AIM-traded firm, formerly known as Walker Greenbank, said trading in the second half of the year ended 31 January recovered to pre-pandemic levels, resulting in the previously-announced upwards revision to expectations for the financial year.

Brand sales were down 15.4% during the year, but were only 1.1% weaker in the second half compared with the latter six months of 2020.

Sales for its Morris & Co brand continued to exceed expectations, particularly in Northern Europe, while branded product sales in Northern Europe were down 5% at constant currencies and 4.3% in reportable currency, with Scandinavia's performance described by the board as “resilient”.

Core licensing income was up 3.3%, the company reported, despite the pandemic.

Manufacturing sales were down 20.2%, reflecting factory closures in the first half, partly offset by strong demand from the UK and export markets, with third-party sales of £11m in the second half, almost at the £11.7m level from the second half of the 2020 financial year.

Adjusted underlying profit before tax fell slightly to £7.1m from £7.4m year-on-year, including £2.7m from the Coronavirus Job Retention Scheme, with stronger sales in the second half coupled with its measures to reduce discretionary and fixed costs.

Cash inflow from operating activities was described as “strong” at £18.2m, up from £9.6m a year earlier, leading to increased liquidity and headroom of £30.5m at year-end on 31 January, rising from £13.8m, with the firm reporting a net cash position of £15.1m, compared to £1.3m 12 months earlier.

“Whilst Covid-19 affected our operational activity during the year, it accelerated the strategic development of the group,” said chairman Dianne Thompson.

“It concentrated our focus on improving the underlying efficiency, agility and productivity of the business.

“It also sharpened our focus on digital strategy and sustainability.”

Thompson said current sales trends in February, March and April were “slightly ahead” of the company’s expectations, reflecting increased demand for home interiors.

“The group has a strong balance sheet with net cash at 31 January of £15.1m, which positions the business strongly in the event of further disruption.

“Overall, we remain cautiously optimistic in our outlook for the year ahead.”

At 1550 BST, shares in Sanderson Design Group were up 2.33% at 164.75p.