Ultimate Products warns of continued trading weakness

10th May 2024 11:15

(Sharecast News) - Ultimate Products reported further weakness in third-quarter trading on Friday, as consumer demand reportedly remained weak.

The London-listed firm, which owns homeware brands including Salter and Beldray, had reported a 4% decline in total revenue in its interim results, while adjusted EBITDA remained relatively steady.

It attributed that dip in revenue to a slowdown in near-term sales from existing stocks, including call-off, regular stock, and online sales, typically carrying higher gross margins, mirroring the broader retail sales decline experienced by consumers.

Revenue for the third quarter saw a subsequent year-on-year decrease of 7%.

The board said that, in anticipation of the trading conditions persisting through the fourth quarter, it projected full-yer revenue to amount to at least £156m, with its gross margin remaining consistent with the prior year.

Adjusted EBITDA was forecast to range between £17.5m and £18.5m.

Despite the challenges, there was optimism for the future as the company saw a gradual return to normal ordering patterns from retail customers.

That resurgence was primarily benefiting the forward order book for the 2025 financial year. "It is disappointing that spring as seen continued poor demand from consumers, which has adversely affected sales in the current quarter," said chief executive officer Andrew Gossage.

"Our assumption is that these challenging conditions will persist in the short-term and so impact our 2024 outcome."

In contrast, Gossage said the order book for 2025, at this early stage, was "significantly ahead" of 2024 as retailers continued to increase forward orders as pandemic-related overstocking subsided and consumer confidence built.

"As such, we remain confident in the group's medium-term prospects."

At 1052 BST, shares in Ultimate Products were down 14.16% at 145.92p.

Reporting by Josh White for Sharecast.com.