AGM Statement

Tandem Group PLC

29 June 2023

 

Tandem Group plc

(the 'Group' or 'Company')

AGM Trading Statement

Tandem Group plc (AIM: TND), designers, developers, distributors and retailers of sports, leisure and mobility equipment, announces that at the Annual General Meeting of the Company to be held today, the Company's Chairman, Steve Grant, will make the following statement, with the Board maintaining its expectations that the Group will achieve market expectations of performance for the full year and particularly encouraging strong growth in the Group's emobility division.

Trading

As previously announced in our Final Results Outlook Statement, trading commenced slowly at the beginning of the year, presenting challenges that persisted throughout the subsequent months. The cautious buying behaviour observed among national retailers, coupled with a delayed Chinese New Year, contributed to the initial difficulties. These circumstances were not unforeseen, as we had previously communicated our expectations. Trading conditions to 23 June 2023 have remained persistently challenging, however, we were pleased with performance in the second quarter particularly in bicycles and eMobility. The prevailing economic landscape, exacerbated by high interest rates and the impact of the ongoing cost of living crisis on the retail sector, has further compounded the obstacles we face.

We have also experienced a shift in the buying habits of national retailers who are transitioning from Free On Board (FOB) purchases to Direct Delivery (DD). This change naturally alters the pattern of our sales, aligning them more closely with the end customer's buying behaviour and therefore the timing difference in sales is to be expected to be weighted in favour of later in the year compared to prior periods.

Overall, our sales have experienced a 26% decrease compared to the prior year. Notably, our Toys, Sports, and Leisure division has been particularly affected, with a 46% decline. However, it is important to highlight that along with the move away from FOB, part of this decline can be attributed to customer overstocks from the previous year that have yet to be cleared, due to the impact of the cost of living crisis and adverse weather conditions experienced thus far in the current year. We therefore remain cautiously optimistic as the year progresses, anticipating a recovery in this segment.

In our Bicycles division, although sales are behind last year overall by 20%, results in Q2 are significantly ahead of the equivalent period in the prior year as we continue to release new products.

Sales in our emobility sector have experienced a significant growth of 51% compared to the prior year. Sales of electric bikes in particular have experienced remarkable success in the first part of 2023. In comparison to the prior year, electric bike sales have more than tripled, reflecting a strong consumer demand and growing interest in electric-powered transportation options. This upward trend in electric bike sales highlights the effectiveness of our strategy in capturing market opportunities.

The sale of electric bikes was positively impacted by the growth in new Independent Bike Dealers and national retailer accounts and our Electric Life shop, an innovative retail concept which, coupled with the Electric Life website, has played an important role in driving awareness, accessibility, and enthusiasm for electric bikes among consumers.

We continue to support legislation that will determine the legality and regulations surrounding electric scooters, and are both well positioned and poised to seize opportunities as soon as clarity emerges.

The Home and Garden division has experienced an overall decline in turnover of approximately 30% compared to the same period in the prior year. This decline is in line with the challenges faced from poor weather conditions in Q1 and the prevailing cost of living crisis continuing to impact non-essential spending.

We were pleased that the decline slowed significantly in Q2 compared to Q1, therefore despite the difficulties we have outlined, we remain optimistic about the potential within the Home and Garden sector.

In a strategic move to enhance our sales and marketing efforts, we have expanded our Jack Stonehouse website as a platform to promote products from other areas of our business. This approach allows us to cross-promote and showcase the diverse range of offerings available across different divisions. By leveraging this untapped potential, we aim to maximise visibility, capture new customers, and drive overall sales growth.

Outlook

Looking ahead, we anticipate that the remainder of 2023 will continue to present challenges for the industry and for the Group. The current market conditions show no signs of abatement, and we anticipate further obstacles as increasing interest rates place additional pressure on the disposable income of households. Despite this, the positive trend we are seeing in sales now is expected to continue throughout the rest of the year.

We are optimistic about the recently released and upcoming movie releases applicable to our licences in 2023 and the positive impact they will have on our popular brands such as Barbie, Paw Patrol, and Spider-Man. These beloved franchises have captivated audiences for years, and with new cinematic adventures on the horizon, we anticipate an increase in demand for branded goods associated with these blockbuster movies.

Our strategic focus on driving new national and independent accounts has yielded positive results. These new partnerships hold great potential as customers work through their previous overstocks with their old suppliers. These new accounts will continue to contribute to our sales as we build strong relationships and establish ourselves as a reliable supplier in the market.

The changing landscape of the bike industry, has given us further opportunity to gain market share alongside the launch of new and exciting products.

We have invested considerable time and expertise into developing designs that embody the quality, craftsmanship, and reliability that our Dawes and Claud Butler brands are renowned for. The significant pre-orders of our highly anticipated new electric bike models are very encouraging. We continue to make strong progress with our strategy of growing the eMobility sector.

Furthermore, we have made significant progress in building our Group and brand awareness. Our proactive approach includes publishing articles in appropriate media outlets, providing us with increased exposure across the industries in which we operate. This heightened visibility has been further enhanced by the recognition we have received through several prestigious awards. These accolades not only validate our commitment to excellence but also serve as a powerful tool to attract new customers and enhance brand authority.

In Home and Garden, we expect sales to perform relatively in line with 2022 by the year-end. We have recently launched new ranges of products, capitalising on market trends and consumer preferences. These new offerings, coupled with improved weather conditions, are anticipated to bolster sales in the Home and Garden division.

Despite all of the current challenges, the Board remain confident in the Group's ability to continue building and gaining market share. We remain committed to evolving our strategies, nurturing customer relationships, and leveraging our growing brand presence to drive further growth and success in the market, and we therefore maintain our view of achieving market expectations of our performance for the full year.

Dividend

We announced on 27 March 2023 that following the results in 2022 it was the Board's view that it was our intention to pay a final dividend of 6.57 pence per ordinary share.  A resolution to that effect will be proposed at the AGM today.  Subject to this resolution being passed, the dividend will be paid on or around 6 July 2023 to shareholders on the register on 12 May 2023 (ex-dividend date 11 May 2023).

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

Enquiries:

Tandem Group plc

Peter Kimberley, Chief Executive

David Rock, Company Secretary

Telephone [phone]

Nominated Adviser

Cenkos Securities plc

Ben Jeynes / Dan Hodkinson - Corporate Finance

Russell Kerr / Michael Johnson - Sales

Telephone [phone]

29 June 2023

Forward-Looking Statements

Certain statements made in this announcement are forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Company's current expectations, estimates, and projections about its industry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The Company cautions security holders and prospective security holders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances, or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.

 

END