Sanderson Design, the upmarket interiors firm, has issued a warning over plummeting profits due to weak demand from shoppers in January. The company, which was awarded a Royal warrant last month, announced that profits for the year are set to fall by more than half. Sanderson informed shareholders that group sales are expected to be around £101m for the year to January, down from £108.6m a year earlier.
This represents a shortfall "of less than 5%" compared with its previous guidance. A "recent worsening of trading conditions" has particularly affected brand product sales, which are predicted to drop by around 9% against the previous year. The company, which sells Morris & Co, Harlequin and Sanderson products, reported that brand sales of wallpapers and fabrics increased by 5% year-on-year in December, but fell by 13% in January as shoppers tightened their belts.
It highlighted that the "downturn in consumer confidence" was "most significant in the UK", its largest market. Sanderson also revealed that it expects to end the year to January with higher levels of stock than anticipated due to subdued customer demand, particularly for fabric.
However, these inventory levels are expected to unwind in the coming months. It further noted that brand product sales have also been impacted by "softness in the contract market at the end of the year, particularly in North America", but emphasised that its pipeline of potential orders remains strong.
