Sanderson Design Group Plc · LSE:SDG
Sanderson Design — H1 FY25 Earnings Presentation
44 slides from Sanderson Design's earnings presentation, Jul 31, 2024
Slide 1: Interim Results for the Six Months Ended 31 July 2024
AGENDA INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 JULY 2024 C L A R K E & C L AR K E | H A R L EQ U IN | M O R R IS & C O | S AN D E R S O N | S C I O N | Z O F F A N Y | A N S T E Y W AL L P A P E R C O M P AN Y | S T A N D F A S T & B AR R A C K S
Slide 2: Agenda
AG E N DA HIGHLIGHTS F IN ANCI ALS S T R AT E G Y O UT LO OK C L A R K E & C L AR K E | H A R L EQ U IN | M O R R IS & C O | S AN D E R S O N | S C I O N | Z O F F A N Y | A N S T E Y W AL L P A P E R C O M P AN Y | S T A N D F A S T & B AR R A C K S
Slide 3: At a Glance
AT A G L AN C E We are Sanderson Design Group PLC, an international luxury interior furnishings company that designs, manufactures, and Journey to Sustainability markets wallpapers and fabrics together with strong licensing partnerships that produce a wide range of ancillary interior products. 0/30
Slide 4: Highlights
H I GH L I G HTS • Revenue decreased to £50.5m (H1 FY24: £56.7m), down 11% in reported currency, reflecting tough market conditions, particularly in the UK • Licensing revenue at £4.1m (H1 FY24: £6.9m); full-year expectations remain approximately in line with last year • Notable launches including S
Slide 5: Financials
FINANCIALS FINANCIALS RISK & OPPORTUNITIES
Slide 6: Key Financial Indicators
K E Y F I NA N C I AL I ND I C ATO R S REVENUE PBT ADJUSTED ADJUSTED ADJUSTED £M £M UNDERLYING UNDERLYING EPS PBT £M PBT % H1 50.5 1.5 2.2 4.3% 2.21p FY25 H1 56.7 6.2 6.8 12.0% 7.39p FY24 C L A R K E & C L AR K E | H A R L EQ U IN | M O R R IS & C O | S AN DE R S O N | S C I O N | Z O F F AN Y | A N
Slide 7: Key Financial Indicators (cont'd)
K E Y F I NA N C I AL I ND 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 3.8 2.6 27.2 (4.5) 9.6 FY25 H1 8.7 1.6 26.2 0.6 15.9 FY24 C L A R K E & C L AR K E | H A R L EQ U IN | M O R R IS & C O | S AN DE R S O N | S C I O N
Slide 8: Group Revenue by Segment
G RO U P R E V E NU E BY S EG M E NT H1 FY25 H1 FY24 % CHANGE £M £M H1 FY24 • Brands Impacted by challenging conditions in the UK Brands 37.2 40.3 (8%) market Licensing 4.1 6.9 (40%) • Licensing Strong H1 FY24 driven by major deals with NEXT and Sainsbury’s Manufacturing – external 9.2 9.5 (2%) • Ma
Slide 9: Brand Product Revenue by Geography
B R A ND P R O DU C T R E V E N U E BY G E O G R AP H Y H1 FY25 H1 FY24 % CHANGE v H1 FY24 £M £M REPORTED CER • UK Challenging market conditions UK 16.7 19.5 (14%) (14%) • North America Sanderson brand performing; North America 11.1 10.7 4% 6% SVP of sales appointed Northern Europe 4.8 5.1 (6%) (2%)
Slide 10: Brand Product Revenue by Brand
B R A ND P R O DU C T R E V E N U E BY B R A N D H1 FY25 H1 FY24 % CHANGE v H1 FY24 £M £M REPORTED CER Clarke & Clarke 10.6 11.6 (9%) (8%) • Clarke & Clarke increased wallpaper offering and collaboration with US influencer Bregan Jane Morris & Co. 9.2 9.4 (2%) (1%) Sanderson 7.0 6.9 1% 3% • Morris &
Slide 11: Manufacturing Revenue
M AN U FA C TU R I N G R E V E NU E H1 FY25 H1 FY24 % CHANGE £M £M H1 FY24 Standfast 9.2 8.9 4% Anstey 8.0 8.2 (2%) • External revenue down due to lower repeat orders in a Total Manufacturing 17.2 17.1 1% subdued environment • Digital output Increasing, enhancing efficiency and Revenue – external 9.
Slide 12: Licensing Analysis
L I C E N SI N G A N ALYSI S UNDERLYING PRIOR YEAR CURRENT YEAR PERFORMANCE - ACCELERATED ACCELERATED IFRS - £M £M INCOME - £M INCOME - £M Category Specialist (core) 1.6 (0.8) 2.2 3.0 Retail Groups (core) 1.6 (1.0) 0.3 0.9 Collaboration - - 0.2 0.2 H1 FY25 3.2 (1.8) 2.7 4.1 Category Specialist (core
Slide 13: Licensing – Underlying Performance
L I C E N SI N G – U N D E R LY I NG PE R FO R MA N CE H1 FY25 H1 FY24 % CHANGE £M £M H1 FY24 UK 1.4 1.3 8% • Licensing revenue grew by £0.5m in H1 FY25, North America 0.9 0.6 50% driven by Ruggable and 53% growth in constant Asia 0.7 0.7 - currency from Sangetsu in Japan Northern Europe 0.2 0.1 100
Slide 14: Gross Profit
G RO SS P R O F I T H1 FY25 H1 FY24 % CHANGE £M £M H1 FY24 Product Revenue 46.4 49.8 (7%) • Licensing income Generates 100% gross margin Licensing 4.1 6.9 (40%) • Product gross margin Revenue Total 50.5 56.7 (11%) • Brand's margin improvement driven by reduced clearance activity, a stronger North Am
Slide 15: Group Income Statement
G RO U P I N C O ME STATE M E N T H1 FY25 H1 FY24 % CHANGE £M £M H1 FY24 Revenue 50.5 56.7 (11%) • Distribution and selling expenses Increased due Cost of Sales (15.7) (18.2) 14% to higher patterning and sampling costs, partially Gross Profit 34.8 38.5 (10%) offset by patterning revenues (other oper
Slide 16: Group Cash Flow
G RO U P C A SH F LO W . • Net cash £9.6m . . • Inventory Higher-than-optimal inventories due to . . lower Brand Product sales and reduced factory . . output . . . • Licensing Minimum guaranteed licensing . . . . receivables increased to £11.2m . • Pension One-off £2.3m contribution to Abaris Pensio
Slide 17: Strategy
STRATEGY PA GE 18
Slide 18: Strategic Statement
ST R ATE G I C STAT E M E N T • Built strong and efficient foundations that have enabled SDG to overcome economic challenges in recent years: • trajectory of increasing margins • steady investment • sharp eye on cost control and cash • Net cash, debt free • UK core market is challenged: • accelerate
Slide 19: 5-Year Key Strategic Framework
5 - Y E A R K E Y ST R AT EG I C F R AM E W O R K OUR LIVE BEAUTIFUL FRAMEWORK CU STO ME RS BRANDS PRODUCTS GEOGR APHIE S OM NIC H AN N E L S A ND E R SO N LIC ENSIN G AC CELER ATE APRO ACH & & GROWTH M O R R I S & CO. COLLABORATION IN THE U SA P E O PL E P L A NE T P R O FI T C L A R K E & C L AR K
Slide 20: Accelerated Transformation
AC C E L E R ATE D T R A NS F O R M AT I O N The leadership team recalibrates the 5YP from a new base following a reduction in core UK sales, O M N IC H A NN E L turning to International growth for market diversification and investing in omnichannel capability for customer engagement and to provide
Slide 21: Digital Transformation
DIGITAL TRANSFORMATION
Slide 22: Accelerated Strategic Initiatives
AC C E L E R ATE D S TR AT EG I C I N TI AT I V E S D IG ITA L T R AN S F OR M AT IO N TO O M N I CH AN N E L • Build Direct to Consumer platforms and drive more consumers to all channels (Morris & Co. live Sept. 24) • Amplify brand visibility and expansion through new marketing initiatives • Build
Slide 23: Omnichannel
O M N I CH A NN E L E N H AN CI N G D IG ITA L E X P E R I E N C E FO R A LL Win Merchants Win Homeowners Win Int. Designers Win SDG / Investors • Drives in-store footfall & halo • “Buy from Brand” • Single Source • New Channel purchases reassurance Product Pricing • Brand awareness & Market • New D
Slide 24: Future Factory
FUTURE FACTORY
Slide 25: Future Factory Vision
F U TU R E FAC TO RY V I S I O N TO BE THE BEST DESIGN-LED PREMIUM FABRIC AND WALLCOVERING PRINTER IN THE WORLD • CONTINUE design-led approach, continuous improvement in quality and service • START focus on innovation in digital printing techniques • STOP conventional processes except value-add only
Slide 26: Digital First Opportunity
D I GI TA L FIRST OPPORTUNITY Brands and 3rd party printing digital first Reduced lead times Generate capital to lower minimums and invest in increased move towards print to digital capabilities order Reduced inventory Improve customer and cost to serve with service with increased increased profit a
Slide 27: Manufacturing Initiatives
M AN U FA C TU R I N G I N I T I AT I V E S • Reduce cloth SKU count, allowing for innovation • Outsource more prep (move to PFP) • Focus on digital first, using value-add conventional only • Move reactive digital to pigment digital • Withdrawal from all vat inks • Investigate alternative digital pr
Slide 28: Responsive Launches
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Slide 29: Responsive Launch Strategy
R E S P O N S I V E L A U N C H S T R AT E G Y • Utilising omnichannel data to fill assortment gaps e.g. outdoor, smaller scale designs • SKU reduction completed FY20-24 • FY25-FY29 introduce new designs on a ‘one in, one out’ basis • Individual launch strategy for each brand • Launch designs, speci
Slide 30: Commercial
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Slide 31: Commercial Key Opportunities
C O MM E R C I AL K E Y O P P O R TU NI T I E S INTERNATIONAL GROWTH • Targeting growth in key international markets with USA as top priority • Expanding global reach with targeted appeal and deep partnerships with regional specialists LEAD UK RECOVERY • Support UK backbone of wholesale customers in
Slide 32: USA Top Priority
U S A TO P P R I O R I T Y WHO • Interior Designers, E-Commerce Retailers, Trade Showrooms, Contract, Agent Showrooms, National Chains, License Partners HOW • US as a priority – make all decisions based on US needs, sense-checking other markets. Focus on Southeast, Texas, and Tri-State • Build relat
Slide 33: UK: Maintain Market Leadership
U K : MA I N TA I N M AR K E T L E AD E R SH I P WHO • Newly appointed team – changed approach from August 2024 to support independent retailers • Bespoke – special projects service for Interior Design practices with Zoffany • Proactive sales team – following leads and new enquiries • Prime Account
Slide 34: International Sales Focus
I N TE R N ATI O N A L SA L E S F O C U S 4 X KEY MARK ETS OF GR OWTH OP PORTU NITY F R A N CE G E R M AN Y S PA I N SW E D E N CORE PRODUCT CORE PRODUCT CORE PRODUCT CORE AND LICENSING GROWTH GROWTH GROWTH GROWTH Build editorial PR agency appointed Morris & Co. Sanderson and Edited capsule for terr
Slide 35: Licensing
LICENSING DEVELOPING INTERNATIONAL PARTNERSHIPS MAXIMISING BRAND HERITAGE AND BRAND EQUITY
Slide 36: Licensing: Key Pillars
LICENSING:KEY PILLARS T E RR ITORY ENGAGI NG SA ND ERS ON NURTUR ING FOCUS R E TA I L E R S B RA ND FOC US PA R T N E R S H I P S • Continue to build US, Japan • Target and secure partnerships • Promote important • Maintain 90% renewals, building and EU partnerships with major retailers globally col
Slide 37: Commercial Summary
COMMERCIAL SUMMARY • Focus on US growth as a priority • UK supported by a new team and new mindset • Omnichannel to service all customers with all brands and categories • New relationships with third parties to leverage Contract and Licensing • Improving global distribution for even regional spread
Slide 38: Live Beautiful
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Slide 39: Our Purpose and Values
O U R P U R P O S E AN D VA LU E S ‘TO BRING THE BEAUTIFUL INTO PEOPLE’S HOMES AND LIVES’ INTREPID IMAGINATIVE RE SPECTFUL 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 everything we
Slide 40: Live Beautiful
L I V E B EAU TI F U L Increased engagement through communication to a broader audience focused on our three pillars A diverse, engaged and enthused work force through Work Beautiful An end-to-end approach of the product lifecycle, continually challenging ourselves to minimise the impact our supply
Slide 41: Zero by 30
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Slide 42: Our Strategic People Priorities FY29
O U R ST R ATE G I C P EO P L E P R I O R I TI E S - F Y 2 5 - 2 9 ONE SA NDER SON D ESI GN G ROU P Context FUTURE TALENT PLANNING LEARNING • Developed Work Beautiful strategy, focused on & & building people capability and infrastructure needed to deliver our strategy SUC CESS IO N CARE ER DE VE LOP
Slide 43: Outlook Statement
O U TLO O K STAT E ME NT •Focused on the strategic growth opportunity of North America, on careful cost control and on implementing strategic changes •Licensing has continued to perform well with a number of new contracts signed in the current half •Trading conditions more challenging than expected,
Slide 44: Financials, Risk & Opportunities
FINANCIALS RISK & OPPORTUNITIES
Sanderson Design Group — H1 FY25 Earnings Presentation on 6ix