Manufacturer’s shares down more than 17% after stark profit warning
Shares in Portmeirion Group, which sells pottery brands including Royal Worcester, are down more than 17% this morning after the company issued a profit warning.
Shares in the Stoke-on-Trent based firm fell 17.65% or 150.00p to 700.00p in morning trading.
It follows the company’s announcement that it expects profit for 2019 to be materially behind expectations as it continues to be impacted by weaker export sales.
The group previously reported that it experienced lower export sales, particularly for South Korea, in the early part of the year.
This morning, the company said that sales into the South Korean market, specifically for the Portmeirion Botanic Garden ranges, continue to be weaker than expected.
“It is clear that the significant historic demand in South Korea for our classic Botanic Garden ranges has led to other geographical markets re-shipping into South Korea, resulting in overstocking in this market,” the company said.
“The clearing of the overstocking in South Korea combined with a more disciplined focus on exports has resulted, however, in a larger than anticipated short term reduction in our Botanic Garden range sales. This, combined with the impact on our development cost and manufacturing processes for new products, will have an impact on the group’s financial performance in the current financial year.”
Portmeirion said that while it is confident that the strategic investments it has made will result in improved manufacturing efficiencies and sales growth in 2020, these will inevitably impact 2019.
“As such, we now expect that the profit for 2019 will be materially behind current market expectations,” Portmeirion said.
“Notwithstanding the challenges in South Korea, we are encouraged by the progress in other strategic areas of focus in the business, including the continued transition to online, expansion of our home fragrance division, and new product development to celebrate our Spode brand’s 250th year in style in 2020. In addition, the integration of the recently acquired Nambé business is progressing well, with positive initial feedback as the group looks to roll out the Nambé brand across our international markets.”.
Mike Raybould, CEO, said: “Since being appointed in September, I have reviewed all of our markets, and our teams have invested a huge amount of resource to resolve the issues we have faced in South Korea which were more challenging than we had anticipated earlier in the year.
“The group has a long and consistent track record of growth, leveraging our heritage portfolio of homeware brands around the world. We believe that the recent actions we have taken will be successful in protecting our brands and export markets in the long term.
“The group continues to invest in its long term strategy. In the last three months there have been key senior level hires in marketing, digital and online and product development to accelerate our progress in these areas.
“With the actions we have now taken, I am confident that we will be able to turnaround our South Korean business and grow strongly in a greater number of markets in the coming years.”
