Toy firm sees 30% Xmas uplift but warns over Brexit complications
Oldham toy group Character enjoyed a bumper Christmas sales period, but warned of Brexit-induced problems in its second half trading period.
In an update ahead of the firm’s annual general meeting this morning, Character said the Christmas 2020 trading period was buoyant for the UK toy sector generally, with the UK market reportedly up by around five per cent year-on-year.
The group’s UK sales for the four months to December 31, 2020 were up approximately 25% over the same period in 2019. International sales in the period were also significantly higher than in the same period last year, with sales to the USA featuring particularly well.
As a consequence, overall group sales were boosted, with an aggregate increase of more than 30% against the comparable period in 2019.
All Character’s major brands and hero lines have sold exceptionally well.
This, coupled with a judicious approach to purchases made for the UK market for the start of this calendar year, has resulted in the group’s inventory at December 31, 2020, being at its lowest level for more than a decade.
Its toys range includes Peppa Pig, Goo Jit Zu, Pokémon, Little Live Pets, Shimmer ‘n Sparkle, Squeakee the Balloon Dog, PenSilly, Gotta’ Go Flamingo, Treasure X , My Baby Tumbles, Project X, Tap It and flipside.
As announced on January 7, 2021, Character has sold the freehold to its former overspill warehousing in Oldham, Vernon Works, for £3.5m in cash, excluding VAT, with completion scheduled for the end of this month. The sale at this price will result in an exceptional profit of approximately £2m.
The group said that, despite the extended pandemic lockdowns and logistical difficulties that have arisen from container shortages, delays with shipping from the Far East, congestion at UK ports and the fall-out from Brexit, underlying profitability for the six months ending February 28, 2021, will be significantly higher than for the same period last year.
However, looking beyond this, the group said it expects the second half year of this financial year to be challenging due to the continuance of the lockdowns, restrictions and the continuing effect that the logistical difficulties are having on freight rates from the Far East – at times quadrupling since September 2020.
Assuming no further worsening of these conditions, the board believes the group will achieve current market expectations for the year ending August 31, 2021.
