Portmeirion issues profit warning amid supply chain disruptions

Portmeirion, the manufacturer, designer and distributor of homewares, has issued a profit warning after being hit with supply chain disruption, de-stocking and political uncertainty.

In a trading update ahead of its year-end of December 31, the firm said it now anticipates FY24 revenue to be around £90m and profit before tax at £1m, which is below market expectations.

With Q4 a key trading period, Portmeirion has experienced supply delays following a hit to the supply chain in Asia, as well as shipping delays in the US due to port strikes.

The manufacturer says the impact of major political events in both the UK and US markets, coupled with the disruption in the US has led to some orders withdrawn, lower replenishment orders and increased costs.

In September, Portmeriorn reported that sales in South Korea had plummeted due to weak consumer confidence and continued destocking. With higher inflationary pressures, interest rates, and a weaker currency, it is expected that sales in the second half of 2024 will be down 13% compared to last year (H1 2024 down 60%).

Despite short-term challenges, Portmeirion says it remains confident in the medium-term outlook and excluding South Korea. Sales are expected to be down in H2 by 6% and full-year sales to be down circa 3% on the prior year at constant currency.

In the US it is “encouraged by the growing consumer demand for our Spode ranges” and after building further contingency into production and supply chain timings, sales are therefore expected to rebound in 2025.

Routes to market in Korea have been simplicifed to accelerate new product launches and boost short-term distributor orders.

Mike Raybould, Chief Executive, commented: “Consumer confidence and spending levels remain challenging across our key markets of the US, Asia and UK. In South Korea, we have made progress in reducing high stock levels, but weak consumer and retailer confidence continue to impact trading in this region. Amidst challenging macroeconomic conditions we are encouraged by ongoing growth in online platforms with online data showing our ranges are retaining their strong market share position.

“We took action at the start of the year to reduce our overhead base by circa £4 million (circa 10%) which will give us a leaner cost base from which to grow profits as consumer markets improve. The impact of lower sales in South Korea and the resulting lower utilisation of our UK tableware factory has had an adverse impact on 2024 profitability, excluding which, overall Group net profitability would be significantly up on 2023.

“We are also pleased to see the ongoing improved performance in our Wax Lyrical division. We are excited about the medium and long term opportunity across our portfolio to grow sales in ROW international sales markets and believe the market share gains and new listings won in the US over the last 3 years will allow sales in these markets to rebound as consumer confidence returns.

“We believe in the strength of the underlying consumer demand for our brands and the opportunity to further leverage them across all markets. Demand for our Spode brand continues to grow across key markets, including the US, reflecting the focus on new product, expanding distribution of our well known ‘Spode Christmas Tree ‘ range and online marketing. We are delighted with the success of our recent ‘Blue & White Christmas’ campaign featuring Jack Kinsey, a local interior designer, whose Instagram reels have already amassed over 8 million views since launch a few weeks ago. Spode sales are already up over 35% over pre Covid levels and we see great opportunity for strong future growth over the coming years.

“Whilst we expect the near-term market outlook to remain uncertain, we continue to focus on what we can control and are confident we can further strengthen our business model and ability to maintain and grow market share across our key markets.”