Sanderson Design Group Plc · LSE:SDG
Sanderson Design — H1 FY2024 Earnings Presentation
42 slides from Sanderson Design's earnings presentation, 2023
Slide 1: Interim Results for the Period Ended 31 July 2023
INTERIM RESULTS FOR THE PERIOD ENDED 3 1 J U LY 2 0 2 3 CLA R K E & CLA R K E | HA R LE QU IN | M OR R IS & CO | S A N DERSON | S CI ON | Z OF F AN Y | A N S T E Y W A LLP A PER COM P A NY | S T A N DFAST & B A R R ACKS PAGE 1
Slide 2: Agenda
AGENDA HIGHLIGHTS FINANCIALS S T R AT E G Y OUTLOOK CLA R K E & CLA R K E | HA R LE QU IN | M OR R IS & CO | S A N DERSON | S CI ON | Z OF F AN Y | A N S T E Y W A LLP A PER COM P A NY | S T A N DFAST & B A R R ACKS PAGE 2
Slide 3: Highlights
HIGHLIGHTS • Adjusted underlying profit before tax of £6.8m, +8% v H1 FY23 • Strong licensing momentum continues with major new agreements signed in H1 generating £5m of accelerated income with strong pipeline of potential future partnerships • Continued growth in North America, +10% and now represe
Slide 4: Financials
CLARKE & CLARKE | HARLEQUIN | MORRIS & CO | SANDERSON | SCION | ZOFFANY | ANSTEY WALLPAPER COMPANY | STANDFAST & BARRACKS
Slide 5: Key Financial Indicators
K E Y F I N A N C I A L I N D I C ATO R S REVENUE PBT ADJUSTED ADJUSTED ADJUSTED £M £M UNDERLYING UNDERLYING EPS PBT £M PBT H1 56.7 6.2 6.8 12.0% 7.39p FY24 H1 57.9 5.5 6.3 10.9% 6.90p FY23 PAGE 5 CLA R K E & CLA R K E | HA R LE QU IN | M OR R IS & CO | S A N DERSON | S CI ON | Z OF F AN Y | A N S T
Slide 6: Key Financial Indicators (cont'd)
K E Y F I N A N C I A L I N D I C ATO R S ( C O N T ’ D ) REPORTED CAPITAL INVENTORY FREE CASH NET CASH EBITDA EXPENDITURE £M FLOW POSITION £M £M £M £M H1 8.7 1.5 26.2 0.6 15.9 FY24 H1 8.7 1.5 26.7 (4.1) 15.0 FY23 PAGE 6 CLA R K E & CLA R K E | HA R LE QU IN | M OR R IS & CO | S A N DERSON | S CI ON
Slide 7: Group Revenue – Channel
GROUP REVENUE – CHANNEL H1 FY24 H1 FY23 H1 FY24 v H1 FY23 £M £M VAR % CHANGE • Brand Product: Tough trading environment in most Brand Product 40.3 42.2 (1.9) (4.6%) territories, especially UK Licensing 6.9 3.8 3.1 81.6% • Licensing: Record agreements signed in the first half Total Brands 47.2 46.0 1
Slide 8: Brand Product Revenue – By Geography
B R A N D P R O D U C T R E V E N U E – BY G E O G R A P H Y H1 FY24 H1 FY23 % CHANGE v H1 FY23 • UK: Sales declined 11.8% reflecting challenging £M £M REPORTED CER market conditions UK 19.5 22.1 (11.8%) (11.8%) North America 10.7 9.7 10.3% 5.9% • Northern Europe: Weak sales in Scandinavia and Repub
Slide 9: Brand Product Revenue – By Brand
B R A N D P R O D U C T R E V E N U E – BY B R A N D • Clarke & Clarke: Recently renewed US distribution agreement H1 FY24 H1 FY23 % CHANGE v H1 FY23 with Kravet Inc for five years. Homeware transitioning to licence £M £M REPORTED CER with NEXT launching in spring 2024 Clarke & Clarke 11.6 11.8 (1.7
Slide 10: Manufacturing Revenue
M A N U FA C T U R I N G R E V E N U E H1 FY24 H1 FY23 H1 FY24 v H1 FY23 • Internal & External revenue H1: £M £M VAR % CHANGE Anstey 8.2 10.4 (2.2) (21.2%) • Return to pre-COVID-19 levels, after restocking Standfast 8.9 11.3 (2.4) (21.4%) in the prior year Total Manufacturing 17.1 21.7 (4.6) (21.3%)
Slide 11: Licensing Income
LICENSING INCOME PRIOR YEAR CURRENT YEAR UNDERLYING ACCELERATED ACCELERATED IFRS PERFORMANCE INCOME INCOME £M £M £M £M Core (regular) 2.2 (0.5) 3.6 5.3 Collaboration (one off) 0.5 (0.3) 1.4 1.6 H1 FY24 Total 2.7 (0.8) 5.0 6.9 Core (regular) 1.9 (0.3) 1.6 3.2 Collaboration (one off) 0.6 (0.3) 0.3 0.6
Slide 12: Gross Margin
GROSS MARGIN H1 FY24 H1 FY23 CHANGE £M £M FY23 • Licensing income: Generates 100% gross margin Product Revenue 49.8 54.1 (7.9%) Licensing 6.9 3.8 81.6% • Improved product margins in Brands: Revenue Total 56.7 57.9 (2.1%) Benefit of completed SKU reduction initiative • Decline in Manufacturing margin
Slide 13: Group Income Statement
G R O U P I N C O M E S TAT E M E N T H1 FY24 H1 FY23 % CHANGE H1 FY24 H1 FY23 £M £M H1 FY23 Gross Margin 67.9% 65.8% Revenue 56.7 57.9 (2.1%) Distribution and selling expenses 22.6% 21.9% Cost of Sales (18.2) (19.8) 8.1% Administrative expenses 39.0% 38.7% Gross Profit 38.5 38.1 1.0% Profit from op
Slide 14: Group Cash Flow
GROUP CASH FLOW • Strong balance sheet: cash of £15.9m • Inventory: Benefit of our SKU reduction strategy. Further reduction forecast in H2 • Licensing: New agreements including NEXT and Tu/Habitat • Pension: Cash contribution to legacy defined benefit schemes • Capital expenditure: New steamer at S
Slide 15: Strategy
CLARKE & CLARKE | HARLEQUIN | MORRIS & CO | SANDERSON | SCION | ZOFFANY | ANSTEY WALLPAPER COMPANY | STANDFAST & BARRACKS
Slide 16: Strategic Priorities
S T R AT E G I C P R I O R I T I E S • Poised for global growth • Primary focus on USA • Growth in Japan, France and Germany • Sanderson heritage brand being re-energised • Licensing continues to grow ahead of product sales • Factories both design led • Technology investment to drive innovation, eff
Slide 17: Our Purpose & Values
O U R P U R P O S E & VA L U E S “TO BRING THE BEAUTIFUL INTO PEOPLE’S HOMES AND LIVES” INTREPID IMAGINATIVE R E S P E C T F U L We’re brave, we’re bold, We take a creative and We consider customers, we take the lead and inspire innovative approach to colleagues, the planet, others around us. everyt
Slide 18: Our Live Beautiful Vision
OUR LIVE BEAUTIFUL VISION “To lead the interiors industry in transforming the way we design, manufacture and distribute, enriching people’s lives, helping them to live beautiful” PAGE 18 CLA R K E & CLA R K E | HA R LE QU IN | M OR R IS & CO | S A N DERSON | S CI ON | Z OF F AN Y | A N S T E Y W A L
Slide 19: 5-Year Key Strategic Levers
5 - Y E A R K E Y S T R AT E G I C L E AV E R S OUR L I V E B E A U T I F U L FRAMEWORK BRANDS PRODUCTS CUSTOMERS GEOGRAPHIES SANDERSON CORE PRODUCT INTERIOR ACCELERATE & & DESIGNERS GROWTH IN THE CLARKE & CLARKE LICENSING USA PEOPLE – EMPOWER OUR PEOPLE F I N A N C I A L H E A LT H – A D D I T I O
Slide 20: 5 Year Strategy
5 Y E A R S T R AT E G Y MEASURES OF SUCCESS: S T R AT E G I C O B J E C T I V E Increase sales in USA GROW USA & INTERNATIONAL Focus on top interior designers globally Increase sales per SKU YEAR1 FY25 YEAR2 FY26 YEAR3+ FY27+ • Interior designer focus globally • Paris Deco Off takeover • Re-launch
Slide 21: Key Strategic Growth Areas
KEY STRATEGIC GROWTH AREAS PAGE 21 CLA R K E & CLA R K E | HA R LE QU IN | M OR R IS & CO | S A N DERSON | S CI ON | Z OF F AN Y | A N S T E Y W A LLP A PER COM P A NY | S T A N DFAST & B A R R ACKS
Slide 22: USA First
USA FIRST To be the biggest imported resource in fabric and wallpapers for Interior Designers in America PAGE 22
Slide 23: US First
US FIRST WHO Interior Designers, E-Commerce Retailers, Trade Showrooms, Kravet Trade Distribution HOW Brand: Think US first US pricing architecture Product Mix - performance, outdoor fabrics, expand wallcoverings Marketing communications: Increase average order value Build relationships with interio
Slide 24: UK: Maintain Market Leadership
UK Maintain market leadership in a challenging environment PAGE 24
Slide 25: UK
UK WHO WHICH BRANDS Prime Accounts, Interior Clarke & Clarke, Designers and Contract Sanderson, Harlequin HOW Marketing Service Customer-centric approach for all customers, Retailers – grow share of voice in a challenging market understanding what they need to help them grow with our products Incent
Slide 26: Licensing – Key Pillars
LICENSING – KEY PILLARS T E R R I TO RY ENGAGING SANDERSON NURTURING FOCUS R E TA I L E R S BRAND FOCUS PA R T N E R S H I P S • Continue to build US • Target and secure partnerships • Elevate and build Sanderson • Support, nurture and build partnerships alongside with major retailers globally brand
Slide 27: Strategic Brand Development
STRATEGIC BRAND DEVELOPMENT PAGE 27
Slide 28: Product Brand Pyramid
PRODUCT BRAND PYRAMID LUXURY Luxury brand laser focused on high-end interior design partnerships H E R I TA G E Heritage brands, continue to build the legacy. Strong collaborations and licensing opportunities CONTEMPORARY Contemporary brands, licensing and retail partnership potential PAGE 28 CLA R
Slide 29: Product Brand Design Pillars
PRODUCT BRAND DESIGN PILLARS LUXURY H E R I TA G E CONTEMPORARY SIGNATURE SIGNATURE SIGNATURE SIGNATURE SIGNATURE SIGNATURE RESTORATION ARTS & CRAFTS BOTANICAL COLOUR LUXE CHARACTERS Masterpiece Authentic Authentic Statement Statement Damask Simply Simply Transitional Weaves Transitional weaves Stat
Slide 30: Product Brand Design Pillars Cont'd
PRODUCT BRAND DESIGN PILLARS CONT ’D LUXURY H E R I TA G E CONTEMPORARY SIGNATURE SIGNATURE SIGNATURE SIGNATURE SIGNATURE SIGNATURE RESTORATION ARTS & CRAFTS BOTANICAL COLOUR LUXE CHARACTERS Masterpiece Authentic Authentic Statement Statement Damask Simply Simply Transitional Weaves Transitional wea
Slide 31: Marketing KPIs
M A R K E T I N G K P I ’s F Y 2 9 INCREASE BY 40% INCREASE BY 33% INCREASE BY 100% BRAND ENGAGEMENT BRAND REACH WEBSITE VIEWS REVENUE PAGE 31 CLA R K E & CLA R K E | HA R LE QU IN | M OR R IS & CO | S A N DERSON | S CI ON | Z OF F AN Y | A N S T E Y W A LLP A PER COM P A NY | S T A N DFAST & B A R
Slide 32: Operations & Manufacturing
OPERATIONS & MANUFACTURING PAGE 32
Slide 33: Operations Strategy
O P E R AT I O N S S T R AT E G Y To be the best design-led interiors company through offering a design service utilising our technical expertise and range of printing capabilities for competitive advantage SALES AND DESIGN AND M A N U FA C T U R I N G MARKETING TECHNICAL A N D S U P P LY PAGE 33 CL
Slide 34: Headline Objectives
H E A D L I N E O B J E C T I V E S F Y 2 4 TO F Y 2 9 H E A LT H LIVE CUSTOMER & SAFETY BEAUTIFUL CENTRIC Lead the interiors industry in Establish customer centric To implement a Health and transforming the way we design, alignment throughout the supply Safety culture throughout manufacture and dis
Slide 35: What Does This Mean?
W H AT D O E S T H I S M E A N ? • Optimising solutions for Group brands • Design at the centre of everything we do • Focus on export markets for third-party sales • Offer volume flexible solutions that balance capacity • Continued growth in digital printing whilst maintaining benefit of specialist
Slide 36: Live Beautiful
LIVE BEAUTIFUL • A diverse, engaged and enthused work force • An end-to-end approach of the product lifecycle, continually challenging ourselves to minimise the impact our supply chain has on the planet • As Zeroby30 nears conclusion, plans for capture of the residual CO2 emissions will be completed
Slide 37: People
s PAGE 37 CLARKE & CLARKE | HARLEQUIN | MORRIS & CO | SANDERSON | SCION | ZOFFANY | ANSTEY WALLPAPER COMPANY | STANDFAST & BARRACKS
Slide 38: People Strategy – Empowering Our People
P E O P L E S T R AT E G Y – E M P O W E R I N G O U R P E O P L E Developing great people to deliver a great performance and create a great place to work • To be the employer of choice in the industry DEVELOP EFFECTIVE • Foster a positive, inclusive, vibrant culture, driving organisational excellen
Slide 39: People Priorities
PEOPLE PRIORITIES OBJECTIVE Developing great people to deliver a great performance and create a great place to work ACCELERATE SUPPORT GROW FOCUS GROWTH GROW HOLD & LICENSING BRANDS by focusing GROW INTERNATIONAL MAINTAIN UK PARTNERS sourced product on key brands USA market leadership with marketing
Slide 40: Outlook
OUTLOOK PAGE 40 CLA R K E & CLA R K E | HA R LE QU IN | M OR R IS & CO | S A N DERSON | S CI ON | Z OF F AN Y | A N S T E Y W A LLP A PER COM P A NY | S T A N DFAST & B A R R ACKS
Slide 41: Outlook
OUTLOOK • Focus on growth opportunities in the US, currently under-weighted • Licensing as a core pillar with strong pipeline • Sampling of new autumn launches encouraging • Cost saving measures mitigate UK market softness • Strong balance sheet and cash reserves • The Board’s expectations for the f
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Sanderson Design Group — H1 FY2024 Earnings Presentation on 6ix