Trading Update

Portmeirion Group PLC

20 July 2023

 

20 July 2023

Portmeirion Group PLC

(the "Company" or the "Group")

Half-Year Trading Update

North American retailer destocking despite robust end consumer demand

Portmeirion Group PLC, the owner, designer, manufacturer and omni-channel retailer of leading homeware brands in global markets, updates on trading for the six months to 30 June 2023.

Sales for our first, traditionally quieter half, are expected to be £44 million, down 3% on the same period last year.

In our AGM statement in May, we highlighted that we have seen some increased caution from US customers.  This caution on ordering from North America (US and Canada) customers has continued and is particularly noticeable amongst the national department stores as they react to the weaker economic climate and take a more conservative approach to stock levels. Accordingly, sales in the US and Canada are down 14% on a year-on-year basis. Despite this and encouragingly our customer demand in North America remains robust for the Company's products supported by the sales out data we have (which covers c.60% of market sales) and the strong forward order book for Christmas which is ahead of last year. Consequently this underlying end-consumer demand should support restocking by our retail customers in due course.

Across our other markets, we have made pleasing progress and are ahead of last year, in line with our expectations. Encouragingly, ceramic sales in rest of world markets, a core element of our growth strategy, are up by 10% and sales in our home fragrance business, Wax Lyrical, are up 15%. In both of these areas we expect continued further growth through the second half.

There has been a good reaction to new product launches in the first six months of 2023, despite the tough consumer climate and we are encouraged by strong order books for our US market with the highly popular Spode Christmas ranges that are up double digit on last year. Designing and launching new products remains a key part of our growth strategy.

In terms of the full year outlook, it is challenging to assess how long the North America caution amongst our retailer customers will endure and whilst we note the encouraging end customer sell through data and our strong Christmas order book, the Board believes that it is prudent to assume that this caution will continue through the second half resulting in the Group's sales being below and profits for FY23 being significantly below current market consensus.

The Group's balance sheet remains strong and we have successfully reduced inventory levels since the end of FY22 and are expected to reduce further by the end of FY23.

Despite the current short-term uncertainty in North America amongst our retail customers, we continue to be confident in the Group's prospects more generally and remain focused on our long-term growth and margin improvement opportunity and making continued progress against our strategy. 

 Mike Raybould, Chief Executive, comment:

"Although consumer markets are clearly tougher than 12 months ago, we continue to invest in our long-term strategy for sales and operating margin growth.

Whilst retailer order flow in North America is currently challenging, our data clearly indicates that end customer demand remains robust, indeed is up on last year. Accordingly, it is important that we ensure that we maintain the investment in our capabilities in North America for when the short-term uncertainty subsides. 

Other key markets have performed in line with our expectations, and we remain confident that we are retaining market share gains made in recent years. We are pleased with our new product launches and the work we have done to grow operating margins which will benefit the Company in the medium and longer term."

Interim results for the six months ended 30 June 2023 will be reported in the second half of September 2023.

Notes:   This announcement contains inside information for the purposes of the retained UK version of the EU Market Abuse Regulation (EU) 596/2014 ("UK MAR").

ENQUIRIES:

Portmeirion Group PLC:
Mike Raybould, Chief Executive	[phone]	[e-mail]
David Sproston, Group Finance Director	[phone]	[e-mail]
Hudson Sandler:
Dan de Belder	[phone]	[e-mail]
Nick Moore Emily Brooker
Shore Capital: (Nominated Adviser and Joint Broker):	[phone]
Patrick Castle Lucy Bowden	Corporate Advisory
Malachy McEntyre Isobel Jones	Corporate Broking

Singer Capital Markets (Joint Broker):	[phone]
Peter Steel	Investment Banking
Asha Chotai

NOTES TO EDITOR:

Portmeirion Group PLC is a leading, omni-channel British ceramics manufacturer and retailer of leading homeware brands.

Based in Stoke-on-Trent, United Kingdom, the Group owns six unrivalled heritage and contemporary brands, with 750+ years of collective heritage; Portmeirion, Spode, Royal Worcester, Pimpernel, Wax Lyrical and Nambé.

The Group serves markets across the world, with global demand driven by diversified international markets including the key geographies of the US, UK and South Korea.

Portmeirion Group has a proven capital-light, well developed and self-funded growth strategy focused on building a wider customer base and growing the sales footprint of its brands, through:

·    Building and growing international sales markets

·    Developing online sales channels in core markets

·    Designing and launching new product to widen appeal and take market share

·    Leveraging brands and extensive product ranges

 

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