We see a significant opportunity to grow top line sales around the world, thereby increasing the utilisation and efficiency of our factories and warehouses, leading to improved operating margins, profitability and cash generation.
We will capture our portfolios of premium brands full potential by:
The way we think and act across all areas of our business must be in the long term best interests of our brands,and supporting their growth. This brand mindset should inform every decision and action, keep us striving for excellence and focused on delighting our customers. It should influence how we work, who we partner with, when we do something and what we explore next.
We sell to over 60 markets, but our 3 ‘established markets’ of North America, UK and South Korea dominate, accounting for 92% of our sales. The 8% balance is derived from 57 remaining ‘international markets’, of which only 3 generate more than £0.5m of sales each.
These international markets offer a clear opportunity to introduce our premium brand presence for the first time and build new relationships with end customers and appropriate retail partners in those markets. It is frustrating that over the many decades we have failed to grow more than a handful of these markets to any level of significance. However, with consistent investment in sales and marketing in future years, we are confident that we can establish our brands in these markets and develop them.
We have successfully grown our online direct-to-consumer sales over the last 4 years and our own websites account for c. 9% of the Group’s sales. We will continue to invest in customer acquisition, conversion and improving digital assets for all online platforms where our products are featured.
We have identified areas where we can improve and that requires investment to better align with our premium brands, to deliver a much enhanced customer experience and financial contribution.
We have an extensive designs archive which we are not actively commercialising. We are exploring how to grow this area of our business in a responsible way, particularly in licensing and through exclusive products and working with appropriate partners in every category.
Seasonal products enable our brands to build enduring relationships with our customers at times of the year that matter to them. Our Christmas tableware collection Spode Christmas Tree was first produced in 1938 for the American market, and 87 years later it is still growing its sales footprint, with growth still to come from existing and new customers in our established and international markets.
We have expertise in the seasonal product category, and while we have achieved a great deal in recent years, we will do more to develop product for other seasonal occasions.
South Korea has been an important market for us over the last 15 years and the Portmeirion Botanic Garden collection is one of the best known in that market. We are confident that sales will recover over time through elimination of overstocks (meaning customers will order more, so increasing our revenue); recovery of Asian consumer economies; and selling our wider collections from our existing portfolio and new products.
We are taking a disciplined approach with controls to improve order flow and channel oversight.
We work to delight our customers. When we achieve that, they share their experience with family and friends and we expand our customer base. We will continue to develop deeper brand engagement through our social channels and online / offline advertising.
The long term success of our business will be determined by how we nurture and grow our premium brands over time. Growth requires investment, specifically in sales and marketing, and a long term commitment to consistently support our premium brands with marketing spend in established and international markets. Over the next 2-3 years, as our net debt reduces, the associated interest cost savings at a minimum will be judiciously allocated to support international brand marketing.