Portfolio of brands serviced from company’s UK base continues to trade well, despite “challenging market conditions”.
As reported in the trading statement issued by the company on 19th September 2017, conditions in the group’s markets remain challenging. The board notes, however, that the portfolio of brands serviced from its UK base continues to trade well, with domestic sales holding up at levels comparable to the same period last year and against the year to date trends of the toy industry as a whole.
Character’s international and FOB sales have been adversely effected by a combination of several factors, not least of which is one of the world’s largest toy retailers entering into Chapter 11 bankruptcy protection in the US and Canada, which has had subsequent knock-on repercussions in every market where it trades (including the UK). The company’s international customers are also taking a conservative approach to purchases.
At this early stage of the group’s new financial year the board considers that, based on the latest sales and market data available to them, the group’s performance for the year ending 31st August 2018 is now expected to be below current market estimates. Nevertheless, the directors believe this to be a temporary downturn and the group anticipates returning to its previous growth pattern during the second half of the 2018 calendar year. This ultimately is expected to be reflected in the financial performance for the year ending 31st August 2019.
The single biggest factor underpinning Character’s optimism is that during 2018 it will be introducing new products, many developed in-house which, together with the current product portfolio will, the directors believe, give the group its strongest ever product line up.
Additionally, even in the tough trading conditions, the company expects its cash flow to remain positive, its reserves to grow, and its Christmas stocks to remain under control. Furthermore, the company states that it is committed to maintaining its progressive dividend policy and continuing its share buy-back programme, as and when considered appropriate.
As reported in September, the business has had a solid finish to the 2017 financial year. Accordingly the directors anticipate that group underlying pre-tax profits for the year ended 31st August 2017 are projected to meet current market estimates. The group’s balance sheet remains strong.
The Character Group will be updating the market further when the company announces its preliminary results during the week commencing 4th December 2017.