Sanderson Design Group Plc · LSE:SDG
Sanderson Design — H1 FY2023 Earnings Presentation
38 slides from Sanderson Design's earnings presentation, October 2022
Slide 1: Interim Results to 31st July 2022
I N T E R I M R E S U LT S T O 3 1 s t J U LY 2 0 2 2 PAGE 1
Slide 2: Agenda
A G E N DA INTRODUCTION FINANCIALS S T R AT E G Y OUTLOOK PAGE 2
Slide 3: Introduction
INTRODUCTION We are Sanderson Design Group plc, an international luxury interior furnishings company that designs, manufactures and markets wallpapers and fabrics together with strong licensing partnerships that produce a wide range of ancillary interior products. The group is home to 7 consumer bra
Slide 4: Continued Strategic Progress
C O N T I N U E D S T R AT E G I C P R O G R E S S • FY23 H1 Revenue of £57.9M, adjusted underlying PBT of £6.3M, representing 10.9% • Licensing income increased 90% • Morris & Co. continues as fastest growing brand at 15.9% • Targeted growth in key USA market continues at 3.3% in constant currency
Slide 5: Financials
FINANCIALS PAGE 5
Slide 6: Revenue - Channel
REVENUE - CHANNEL H1 FY23 H1 FY22 H1 FY23 v H1 FY22 £M £M VAR % CHGE Brands 42.2 43.3 (1.1) (2.5%) Licensing 3.8 2.0 1.8 90.0% • Brand product sales down 2.5% on H1 FY22 (down 3.5% in Total Brands 46.0 45.3 0.7 1.5% constant currency) • Licensing income driven by new and renewed contracts Manufactur
Slide 7: Revenue - Geography
REVENUE - GEOGRAPHY H1 FY23 H1 FY22 H1 FY23 v H1 FY22 £M £M VAR % CHGE • UK 0.9% below prior year. Strong performance from larger UK 22.1 22.3 (0.2) (0.9%) North America 9.7 8.6 1.1 12.8% accounts offset by declines in small independent distribution Northern Europe 5.5 6.9 (1.4) (20.3%) (PY benefitt
Slide 8: Revenue - Brands
REVENUE - BRANDS • Clarke & Clarke: strong performance +9.2% USA H1 FY23 H1 FY22 H1 FY23 v H1 FY22 £M £M VAR % CHGE • Harlequin: focus on driving renewed impetus through the Own the Room campaign Clarke & Clarke 11.8 12.6 (0.8) (6.3%) • Morris & Co.: continues to be the Group’s strongest performing
Slide 9: Revenue - Manufacturing
R E V E N U E - M A N U FA C T U R I N G H1 FY23 H1 FY22 H1 FY23 v H1 FY22 £M £M VAR % CHGE Anstey 10.4 10.9 (0.5) (4.6%) • Third party Manufacturing sales down 2.5%. Standfast 11.3 10.1 1.2 11.9% Strong performance at Standfast (significant US customer Total Manufacturing 21.7 21.0 0.7 3.3% base) o
Slide 10: Licensing Income
LICENSING INCOME UNDERLYING PRIOR YEAR CURRENT YEAR PERFORMANCE - ACCELERATED ACCELERATED IFRS - £M £M INCOME - £M INCOME - £M Core (regular) 1.9 (0.3) 1.6 3.2 • Licensing income on IFRS basis increased by 90% to £3.8M Collaboration 0.6 (0.3) 0.3 0.6 • Underlying Licensing income of £2.5M up 13.6% a
Slide 11: Gross Margin
GROSS MARGIN H1 FY23 H1 FY22 H1 FY23 v H1 FY22 £M £M VAR % CHGE Product Revenue 54.1 55.5 (1.4) (2.5%) • Licensing income generates 100% margin Licensing 3.8 2.0 1.8 90.0% • Product Gross Margin improvement: Revenue Total 57.9 57.5 0.4 0.7% • Shift towards higher margin digital production Product Gr
Slide 12: Group Income Statement
G R O U P I N C O M E S TAT E M E N T H1 FY23 H1 FY22 H1 FY23 v H1 FY22 £M £M VAR % CHGE Revenue 57.9 57.5 0.4 0.7% • Distribution and selling expenses: Cost of Sales (19.8) (21.6) 1.8 8.3% Gross Profit 38.1 35.9 2.2 6.1% • Higher patterning costs partially offset by £0.3M additional patterning reco
Slide 13: Group Balance Sheet
GROUP BALANCE SHEET H1 FY23 H1 FY22 FY222 £M £M £M Intangible assets 26.3 27.6 27.0 Property, plant & equipment 11.9 11.8 11.3 Right-of-use assets 4.7 4.9 3.9 • Strong balance sheet with cash of £15.0M Retirement benefit surplus 2.6 - 2.6 Minimum guaranteed licensing income 2.7 1.9 1.6 • Accelerated
Slide 14: Group Cashflow
GROUP CASHFLOW H1 FY23 H1 FY22 £M £M Profit before tax 5.5 4.9 • Working capital driven by £4.0M inventory, £1.5M accelerated Interest, Depreciation and Amortisation 3.2 3.5 licensing income and £3.7M trade and other payables EBITDA 8.7 8.4 • Cash contribution in H1 of £1.2M to legacy defined benefi
Slide 15: 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 - £M ADJUSTED ADJUSTED ADJUSTED £M UNDERLYING UNDERLYING EPS PBT - £M PBT H1 57.9 5.5 6.3 10.9% 6.90p FY23 H1 57.5 4.9 5.6 9.7% 6.11p FY22 PAGE 15 A R CHI VE | 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
Slide 16: Key Financial Indicators (cont...)
K E Y F I N A N C I A L I N D I C ATO R S ( C O N T … ) REPORTED CAPITAL INVENTORY - FREE CASH NET CASH EBITDA - £M EXPENDITURE £M FLOW - £M POSITION - £M - £M H1 8.7 1.5 26.7 (4.1) 15.0 FY23 H1 8.4 1.2 18.7 (0.1) 15.4 FY22 PAGE 16 A R CHI VE | CLA R K E & CLA R K E | HA R LE QU IN | M OR R IS & CO
Slide 17: Strategy
STRATEGY PAGE 17
Slide 18: Our Live Beautiful Framework
OUR LIVE BEAUTIFUL FRAMEWORK BRANDS PRODUCTS CUSTOMERS GEOGRAPHIES ELEVATE OUR REIMAGINE OUR EXCEED OUR GROW OUR UK, BRANDS AND CREATE PRODUCTS: FABRIC, CUSTOMERS’ USA AND CONSUMER DEMAND WALLPAPER, PAINT NEEDS IN A NORTHERN AND HOMEWARES DIGITAL WORLD EUROPE BUSINESSES PEOPLE – EMPOWER OUR PEOPLE F
Slide 19: 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’ I N T R E P I D I M A G I N AT I V E R E S P E C T F U L WE’RE BRAVE, WE’RE BOLD, WE WE TAKE A CREATIVE AND WE CONSIDER CUSTOMERS, TAKE THE LEAD, AND INSPIRE INNOVATIVE APPROACH TO COLLEAGUES, THE PLANET, AND OTH
Slide 20: Our Live Beautiful Vision
OUR LIVE BEAUTIFUL VISION PAGE 20 A R CHI VE | 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 APER COM P A NY | S T A N DFAST & B A R R ACKS
Slide 21: Strategic Progress
S T R AT E G I C P R O G R E S S The management team has navigated external headwinds, delivered business transformation and strengthened foundations for the future. S T R O N G E R F O U N D AT I O N S • The brands are clearly defined, US market is in sharp focus, topline has held through SKU reduc
Slide 22: Strategic Milestones in Progress
S T R AT E G I C M I L E S TO N E S I N P R O G R E S S J A N ’ 2 3 J A N ’ 2 4 J A N ’ 2 5 Product reduced to 12,000 SKUS (fabric and • Product reduced to 10,000 Live SKUS of • Growth in all brands wallpaper) fabric and wallpaper and retain discipline • USA market share doubled from FY20 ROI pe
Slide 23: USA Spotlight
U S A S P OT L I G H T • Ecommerce through partners now represents 17% of US sales, an increase of 77% vs H1 FY22 • Perigold (a luxury division of Wayfair) is performing +80% to LY, representing a significant future growth opportunity • Influential Studio McGee x Morris & Co. special edit targets a
Slide 24: Brand Positioning
BRAND POSITIONING T I M E L E S S H E R I T A G E A R C H I V E T R A N S I T I O N A L P O W E R E D U R B A N M O D E R N PAGE 24 A R CHI VE | 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 APER COM P A NY | S T A N DFAST & B A R
Slide 25: Our Brand Characters
OUR BRAND CHARACTERS A R C H I V E C L A R K E & C L A R K E H A R L E Q U I N M O R R I S & C O . REBEL POLISHED EMPOWERED CRAFTSMAN S A N D E R S O N S C I O N Z O F F A N Y TIMELESS FUN-LOVING R E S T O R AT I O N BEAUTY PAGE 25 A R CHI VE | CLA R K E & CLA R K E | HA R LE QU IN | M OR R IS & CO
Slide 26: Clarke & Clarke Spotlight
C L A R K E & C L A R K E S P OT L I G H T CLARKE & CLARKE • 2 new wallpaper books launched September 2022 • Wedgwood new collection launched worldwide for fabric, homewares and wallpaper • US distribution partnership with Kravet continues to drive growth for fabric and wallpaper. Finished goods lau
Slide 27: Harlequin Spotlight
H A R L E Q U I N S P OT L I G H T HARLEQUIN • Own the Room campaigns with collaborators - Diane Hill SS22 • Celebrity Colour Panel, Designer’s Presentation and interactive Colour Pods, launched AW22 Colour 3 at FOCUS in September • John Lewis Partnership strategic alliance activated with the launch
Slide 28: Morris & Co. Spotlight
M O R R I S & C O . S P OT L I G H T MORRIS & CO. • Morris & Co. garden at RHS Chelsea in May 2022 received £1.8M media coverage • First Morris & Co. shop since 1917 opened in Harrods in April 2022 • New licensing partners include Pooky, Totter + Tumble, Next Flowers, and Paige • Williams Sonoma lau
Slide 29: Sanderson Spotlight
S A N D E R S O N S P OT L I G H T SANDERSON • First US licensing partner Paige successful launched SS22 • Anthropologie sofa collaboration launched July 2022 • New licensee House of Regent launches candles in November LOOKING FORWARD • Disney collaboration to celebrate Sanderson vintage designs • S
Slide 30: Archive / Scion / Zoffany
A R C H I V E / S C I O N / Z O F FA N Y Z O F FAN Y • Working into the DNA and luxury offer • Customer event at Temple Newsam Estate, the birthplace of Zoffany • Artistic collaborations with Royal College, H&G Rising Star Award ARCHIVE • Following launch September 2021, sales remain small • Steady
Slide 31: Retail Value of Brands
R E TA I L VA L U E O F B R A N D S N E T W O R K VA L U E O F P R O D U C T Total Brand Equity - The retail value of all Brand sales is equivalent to c.£150M in H1 FY23 and c.£300M in FY22. FY22 Trade value: • Wallpaper, fabric and paint - £84.3M • Licensing income through partners - £5.0M (underly
Slide 32: Supply Chain Highlights
S U P P LY C H A I N H I G H L I G H T S Total SKUs reduced 40% from 20,000 to 12,000 over 3 years. Sales per Revenue/Live sku sku increased 69%. Fabric and Wallpaper only • 30 collections FY23 (SKUs: 925, 81% new, 19% existing) • 52 collections FY20 (SKUs: 2,330, 100% new) • Reduction in live SKUs
Slide 33: Manufacturing Highlights
M A N U FA C T U R I N G H I G H L I G H T S H E A L T H & S A F E T Y External audit and Anstey ISO45001 E N E R G Y Solar panels at Standfast & Barracks for ca 15% electricity consumption at site. Electricity supply reset from Oct 22 and gas under fixed contract until Oct 23 I T New ERP due to com
Slide 34: Marketing & Digital Highlights
M A R K E T I N G & D I G I TA L H I G H L I G H T S UP BY 30% UP BY 20% UP BY 20% Increase Instagram Increase PR Media Maintain average Increase average FY TARGET followers to 550k Value (AVE**) to 12.5m unique daily Trade Hub unique daily Consumer (463k H1 FY 2022*) (£11.5m H1 FY 2022) Visits at 1
Slide 35: ESG/Live Beautiful – Planet
ESG/LIVE BEAUTIFUL – PLANET PROGRAMME OBJECTIVE • To create a tailored strategy and roadmap to support Sanderson Design Group to achieve a net zero carbon position by 2030. • Allowing the business to accelerate from ambition to the action needed to deliver on your net zero commitments. WE ARE PLANET
Slide 36: ESG/Live Beautiful - People
ESG/LIVE BEAUTIFUL - PEOPLE • Commitment to invest in nurturing our talent with the appointment of a Group Learning & Development Partner • Sanderson Futures Team talent programme for succession • Strategic partnerships with Furniture Makers Company, QEST and Walpole • Community groups support local
Slide 37: Trading Outlook
TRADING OUTLOOK Our current year performance to date is testament to the diversity of our model, and we continue to anticipate meeting Board expectations for the full year. Given the uncertainties in the current macro-economic and consumer environment, we look forward with caution and continue to ac
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DESIGN GROUP
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