Tandem Group on track to meet full-year expectations

26th Jun 2024 14:07

(Sharecast News) - Sports, leisure and mobility equipment specialist Tandem Group said in an update on Wednesday that it remained on track to meet market expectations for the year ending 31 December 2024.

The AIM-traded firm, which was holding its annual general meeting, said that, despite facing significant challenges such as rising freight costs, wet weather, and high interest rates affecting consumer spending, it had demonstrated resilience and strategic agility.

Its freight-on-board (FOB) sales had declined compared to the previous year, as anticipated.

However, recent months had shown a positive trend with a resurgence in retailer confidence and increased FOB orders.

As of 31 May, overall sales were up 3% year-on-year, driven by a focus on introducing new and innovative products.

The toys, sports and leisure division had performed particularly well, with domestic market sales up 22% compared to the prior year.

Tandem said the golf segment, including electric golf trolleys, saw a 14% increase in turnover, despite adverse weather conditions.

The bicycles division reported a 9% sales increase, with the Squish brand of lightweight children's bikes experiencing a 21% improvement.

In contrast, the eMobility division's sales dropped by 15% due to exceptionally high sales volumes in the same period last year.

The home and garden division meanwhile faced a 19% decline in sales, largely attributed to increased rainfall and an unusually warm start to the year, impacting heating product sales.

Looking ahead, Tandem said it anticipated continued challenges from high freight costs, exacerbated by the conflict in the Red Sea, leading to longer shipping times and container shortages.

Despite the obstacles, the group said it was optimistic about its strategic growth opportunities, including exploring acquisitions to complement existing operations and expanding sales into Europe.

The group secured a new five-year bank facility with HSBC, replacing all existing loans and ensuring financial stability for future growth initiatives.

Efforts to reduce supply costs and maintain margin levels were ongoing, with a commitment to sourcing innovative products and investing in new product development.

New proprietary brands like MoVe and Squishles were gaining popularity, and the group's licensed product sales, including Spider-Man, Bluey, Stitch, and Sonic, remain strong.

The launch of new toy ranges, such as licensed bumper cars and Rollacases, was expected to be well-received.

In golf, the introduction of affordable package sets under the Pro Rider brand was aiming to attract entry-level golfers.

The group said it was also expanding its range of electric bikes, adding renowned brands like Cannondale, Gocycle, and Tern, and was continuing to grow its partnership with Bikeability through the Squish brand.

For the home and garden division, new ranges of garden furniture, ceiling fans, awnings, and air coolers were expected to drive sales during the summer months.

The group said it was also optimising warehouse capacity through the rental of space and 3PL services.

"Despite the challenges presented by increased freight costs, adverse weather conditions, and high interest rates, the board remains confident in the group's ability to meet market expectations," the company's directors said in their statement.

"We will continue to invest in new products and innovation, ensuring that our offerings stay fresh and aligned with market trends.

"Additionally, we are committed to forging new partnerships with customers to drive growth and expand our market presence.

"The strategic initiatives and investments we have outlined, position us well to navigate the current environment and capitalise on future opportunities."

At 0922 BST, shares in Tandem Group were down 6.78% at 165p.

Reporting by Josh White for Sharecast.com.