Downturn hits UP Global Sourcing
RETAIL supplier UP Global Sourcing, formerly Ultimate Products, saw sales and profits fall last year as the downturn took its toll on consumer spending.
Newly-filed accounts for the year to July show turnover at the private equity-backed Oldham business dropped by £21.5m, or 27%, to £56.3m.
UK sales fell from £58.4m to £39.9m and dipped from £7.2m to £6.9m in Europe. There was a sharp fall in US sales from £7.3m to £2.8m, but across the rest of the world revenues increased to £6.5m from £4.8m.
Pre-tax losses widened from £1.6m to £4.1m. Earnings before interest, tax, depreciation, amortisation (EBITDA) and exceptionals – a key measure in private equity-backed firms – fell to £779,000 from £3.7m.
During the year the business sold its 49% shareholding in the Ultimate Products (Hong Kong) to Dinesh Mulani, a minority shareholder, and in March it agreed a £12m refinancing with HSBC until 2017. The accounts show UP reduced staff numbers from 244 to 207 and paid around £1.4m in loan note interest and a further £428,000 servicing bank loans.
In a separate statement the firm, which operates a 175,000 sq ft warehouse and showroom complex in Chadderton, said it had generated strong operating cashflow of £4.4m during the year (2011: £4.8m) thanks to disciplined cash management.
It also said a number of measures implemented since last year had helped to improve profitability in the current financial year, although sales remained challenging due to continuing weak consumer confidence.
Originally founded by young entrepreneur Simon Showman and business partner Barry Franks as a stock clearance business 15 years ago, it now sources and supplies more than 5,000 products to major retailers around the world across core categories, from homewares and electricals to lighting and furnishings, providing end-to-end product management.
Mr Showman, the firm’s chief executive, said: “The retail market has been challenging. Strong management, good cashflow generation and the continued support of our customers has enabled us to weather the storm far better than most. The new four-year facility from HSBC is a real vote of confidence in the group and its management and allows us to focus on the business’s longer term commercial objectives.”
He added: “Looking ahead, the quality of our brand, the breadth of proposition, our focus on innovation and our international exposure will enable us to take advantage of a recovery across the sector.”
Private equity backer LDC has owned 46% of the business since a £25m buyout in 2005.
