Ultimate Products revises down full year forecasts following flat trading

Ultimate Products, the Oldham-based homeware brands group, has revised its annual forecasts down following a poor third quarter of trading, in the three months to April 30, 2024.

It said it has been affected by a period of flat trading, which it sees continuing into the fourth quarter.

Consequently, it said directors expect the 2024 fiscal year revenues to be at least £156m, with gross margin being in line with last year, and Adjusted EBITDA to be in a range of £17.5-18.5m.

This compares with the 2023 results which were revenues of £166.3m, and an Adjusted EBITDA of £20.2m.

The group explained that in its 2024 interim results, it reported total revenue down four per cent with Adjusted EBITDA broadly flat on the prior year.

Since then, trading has been impacted by a slowdown in near-term sales from landed stocks – call off, regular stock and online sales – typically at higher gross margin, reflecting the broader slowdown seen in retail sales to consumers.

This has resulted in revenue being down seven per cent year-on-year for Q3. The directors believe it is sensible to assume that these trading conditions will continue throughout Q4.

However, the group said that, as the year progresses, it is continuing to see the gradual resumption of normal ordering patterns from its retailer customers as the overstocking issues brought about by the pandemic subside.

The increase in forward ordering by retailers has primarily been benefiting the forward order book for fiscal year 2025, and as a result the group is already seeing significant growth over the FY24 order book. The directors say they have confidence in the group’s prospects for FY25.

Chief executive, Andrew Gossage, said: “It is disappointing that spring has seen continued poor demand from consumers, which has adversely affected sales in the current quarter.

“Our assumption is that these challenging conditions will persist in the short term and so impact our FY24 outcome.

“In contrast, the order book for FY25, at this early stage, is significantly ahead of FY24 as retailers continue to increase their forward orders as the overstocking issues brought about by the pandemic subside and consumer confidence builds as we see a return to real wage growth. As such, we remain confident in the group’s medium term prospects.”

Consensus market expectations for the group’s financial year ending July 31, 2024, are currently revenues of £166.7m, adjusted EBITDA of £21.5m and adjusted EPS of 15.6p.

The company also announced the start of a £1m share buyback programme today, which will run until July 31, 2024. More tranches could be announced at a future date.