Our brands have a combined history of more than 750 years as the much loved choice for our customers’ homes. Our ambition is to be a leading force in the global homewares category.
Investment case
Global brands loved around the world
The Group owns six major brands which are sold into over 80 countries around the world and have a combined history of more than 750 years.
We are committed to developing and expanding the reach of our brands, with particular focus on growing our digital marketing strengths.
Portmeirion Botanic Garden celebrated its 50th year in 2022 and Spode Christmas Tree, first launched in 1938, remains a perennial US market favourite.
Online sales and capability to grow this channel
Our online channels remain a key part of our growth strategy. Reflecting the change in consumer behaviour to digital, we continue to invest in our online platforms, fulfilment and capabilities.
We place strong focus on the growth of our own ecommerce, D2C for retail customers and building partnerships with distributors/retailers who have a like-minded approach to digital growth.
Strong operational capabilities
The Group maintains two factories in the UK, these factories made up 45% of the revenue generated in 2023, with the remaining 55% coming from sourced product sales. Product from our six global brands is shipped mainly via our distribution centres in the UK, US and Canada.
We continue to build capabilities and capacity in our operations including the finalisation of our mezzanine floor project at our main UK distribution centre to enhance D2C order fulfilment.
We have further investment planned for our D2C capabilities at our UK, US and Canada distribution centres.
Robust balance sheet and facility headroom to support growth
The Group maintains a robust strong balance sheet in light of external inflationary pressures and at 31 December 2023 had £17.6 million of headroom via cash and bank facilities available.
We have continued to focus on working capital efficiency and have seen a £5.2 million (13%) reduction in inventory, and expect further benefits in 2024.
Reports and Presentations
Our reports and presentations are available on this website under Investors, Reports and Presentations. This includes presentations made to Institutional Investors on our interim and full year results.
We take part in Investor Meet Company presentations thereby providing the same access to management to all shareholders as Institutional Investors have, regardless of the number of shares owned or where the shareholders is located. We encourage all shareholders or potential shareholders to register on the Investor Meet Company website at www.investormeetcompany.com. This is a free service and anyone can register, whether a shareholder or not. Once you have registered on the website, you go to your dashboard and type the company name in the search bar. Then simply click "Add to meet" on the company you want to meet. From this point forward you will be invited to every presentation the company holds on the platform, once that company is active. This will allow you to access Portmeirion Group presentations and any other company you are interested in and which has subscribed.
Strategic areas of focus
We see a strong opportunity to grow our sales as sales markets around the world normalise following a period of inflation and interest rate shocks on consumer spending.
We remain focused on:
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Developing our key heritage ranges that are well known around the world through new product extensions, new sales channels and new geography.
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Increasing our market share in contemporary and giftware markets. We intend to drive this via new product development and leveraging our well-known brands and global sales infrastructure.
1. Geography - building and growing sales markets outside of our three core markets of North America, UK and South Korea
Rest of World tableware sales markets grew by 16% in 2023, for the third year of successive growth, reflecting successful implementation of our diversification strategy. Our products are well known and sold in more than 80 countries around the world.
Our three core markets of UK, North America and South Korea account for 92% of Group sales and we see a significant opportunity to continue to grow the contribution from ‘Rest of World’ sales markets.
We continue to work with existing partners as well as appointing new distributors to grow our customer reach around the world.
2. Online – further developing online sales channels in our core markets reaching more potential customers on more occasions
We continue to invest in building long term direct-to-consumer relationships through our own ecommerce sites in the UK and US. In 2023, we moved to a global ecommerce team structure which led to improved levels of profitability and provides a good platform for growth in the medium and long term.
In 2023, in our core UK and US markets, sales through online channels represented 44% of revenue (2022: 51%, 2019: 30%) as customers continued to return to physical retail channels. In South Korea we have increased online channel presence in 2023 driving sales growth in this market.
In 2023, our own ecommerce sales represented 12.4% of total sales in the UK and US (2022: 14.2%, 2019: 9.7%), the reduction representing a more normalised shopping environment as consumers continued to return to physical stores. Notwithstanding this post-Covid correction, we expect the longer term trend towards a greater ecommerce mix of sales to continue.
We saw an excellent sell through of our key Christmas lines across online channels and were encouraged by an improving trend in the UK with our own ecommerce orders up 9% YOY in the last 8 weeks of the year. We continue to expand the availability of our Christmas ranges in online space around the world and the strong sell through in 2023 should drive good sales momentum through our online channels for 2024.
3. Designing and launching new product - widening the appeal with our existing customer base and taking market share
Sales from new product launches and extensions to existing ranges continued to drive a healthy return, contributing over 10% of the Group’s sales in 2023.
New product is critical to our customers and our growth strategy. It enables us to refresh key heritage ranges, allowing consumers to add to collections as well as providing us with opportunities to target market share gains in new areas of the market. We have a strong, experienced global product development team and rolling roadmap of new launches for the next 24 months.
In 2023, our product extensions to our key Spode Christmas Tree range sold through well – and we see considerable further opportunity to grow this range in its core US market but also around the world.
Again under our Spode brand, we successfully launched a collaboration with renowned British interior designer, Kit Kemp. This new range gained listings in store and online and featured in Bloomingdales stores in the run up to the seasonal holiday period. It has also started to be rolled out in Firmdale Hotel Group’s sites in London with New York to follow in 2024.
In our home fragrance division, Wax Lyrical, we developed a new range that went into Asda in the second half of the year and will roll out to further national store chains in 2024.
We have a number of important new product launches planned for 2024. This includes a beautiful new stoneware range ‘Portmeirion Minerals’ that we are excited to launch in John Lewis in the UK and will target similar in store and online listings around the world.
We will expand our Spode Blue Italian heritage range (first launched over 200 years ago) with a new tie-in blue and white stripe pattern that works as a stand-alone tableware range or can be mix and matched with the original Blue Italian.
We will continue to expand our licensed tableware and giftware collaborations including Sophie Conran for Portmeirion, Royal Worcester Wrendale Designs and Portmeirion Sara Miller London.
In our home fragrance division, we will continue to expand our new ‘Wax Lyrical England’ candle and diffuser range into new fragrances and will be launching a stronger Christmas product line up as well as new gifting formats.
4. Leveraging our brands
Our brands are well known across our key markets and we see a strong opportunity to leverage our portfolio across different markets.
Portmeirion Botanic Garden remains one of the top tableware brands in South Korea and consistently features in the top 2 brands in online searches. We are excited by opportunities to leverage this brand awareness across our other existing ranges and into new potential categories. This will include launching our first range of Botanic Garden bed linen in 2024.
We will continue to focus on opportunities to grow our Spode Christmas Tree tableware and giftware ranges outside of its core US market.
Similarly, our US centred brand, Nambé is now on sale in South Korea and Rest of World markets.
As well as leveraging our brands across geographic regions we have also been diversifying into new market segments. During the year we launched our new Spode range with British designer Kit Kemp with the new range featuring across many of Firmdale Group’s premium hotels in London and New York. This is an exciting development for the Group as we continue to build visibility across our markets. This partnership will also see our Spode range being accessible to guests within their hotel room brochure where they can purchase their favourite products. Our Spode collection can be found in The Covent Garden, Number 16 and The Knightsbridge in London and The Warren Street in New York.
We are focused on the opportunity to improve our operating margins to a medium term target of 10% and in the long term back to historic highs of 12.5% (2023: 4.7%, 2022: 7.8%). Although operating margins fell in 2023 on reduced sales, we are confident the action taken below will result in a meaningful improvement in the future.
There are a number of drivers of this improvement:
1. Improving productivity and efficiency in our UK factories through capital investment and process improvement
We are proud to manufacture around 50% of our tableware sales in our factory in Stoke-on-Trent and believe that ‘Made in UK’ carries a significant premium in certain markets, particularly Asia.
We have accelerated capital investment in the site over the last 3 years investing in automation, reducing manual handling so that we can increase productivity and capabilities.
In December 2023 we installed two new major pieces of capex – an automated dipping line and a new glaze line. As these projects come fully on stream in early 2024, they will further improve productivity and reduce energy consumption. During 2023 we also commenced roll out of a new real time production data system that will drive reduced downtime across key machines.
We are also delighted that ongoing project work to reduce our energy consumption and carbon footprint resulted in 8% lower energy used in our UK factories vs 2022.
We believe that in the medium term, factory productivity improvements have the potential to add 1-2% to Group operating margins.
2. Leveraging our fixed cost base as we grow top line sales
As a business with two UK factories and significant infrastructure in key sales markets, we have the opportunity to leverage our spare capacity and distribution networks by growing our top line sales.
We have taken the opportunity in the last few months to restructure our cost base to provide a significantly leaner operating model that should allow operating margins to improve more quickly once sales markets around the world normalise. As a result, we anticipate overhead costs will be around 10% (£4m) lower in 2024 than the prior year.
Over the long term we see an opportunity to grow our global sales base by 30-50% over 2023 levels and believe this would contribute a 3-4% improvement in operating margins over recent years. Our capex investments over the last few years put us in a good position to grow the business from an efficient and dynamic cost base as and when global markets improve.
3. Improving the profitability of our home fragrance division back to pre-Covid levels
Wax Lyrical, our home fragrance division, that manufactures fragranced candles, diffusers and hand and body products in our factory in Cumbria was significantly impacted by the closure of much of its customer base due to Covid. Concentrated in physical retail, the nature of the product meant there was a much lower transition to online sales channels than with our core tableware business. As a result sales fell in 2021/22 leading to the division making a loss.
We are pleased that the business returned to growth in 2023, with sales up 24% and a reduced loss to prior year.
We expect the division to continue to improve sales and profitability in 2024 and 2025 and this will help grow overall Group operating margins. We estimate that this could add 1-2% to operating margins.
25 March 2024
