10th Mar 2020 10:38
(Alliance News) - Brand Architekts Group PLC on Tuesday reported a sharp drop in first half revenue and warned that the second half may hold further trouble.
The company also lowered its interim payout, proposing an interim dividend of 0.9 pence, down 58% on the 2.15p distributed the year before.
Shares in the beauty brands company were down 22% in London on Tuesday mid-morning at 127.55 pence each.
For the 28 weeks to January 11, Brand Architekts reported pretax profit of GBP302,000, down sharply from the GBP1.1 million seen in the same period the year before.
Revenue in the first half slipped 15% year-on-year to GBP10.6 million from GBP12.5 million. The company said it was a "challenging" period with a number of factors contributing to the sharp drop in revenue.
International sales declined by 23%, hurt by currency devaluation in a key market and the effect of increased tariffs on cosmetic goods shipped from China to the US.
"We believe that we are well placed to recover a large proportion of the affected USA business should the tariffs be reversed," Brand Architekts said.
Sales to UK customers declined by 13% despite "encouraging" volume growth across 3 'drive' brands, 2 of which were re-launched within the period.
The company commented: "The decline was largely due to one significant customer, however, overall low consumer confidence and pressure within the retail environment has resulted in a reduction of both category space and the effectiveness of promotional activity."
Brand Architekt's commercial & administrative costs rose 6.9% to GBP3.1 million from GBP2.9 million.
Chair Brendan Hynes said: "The business is now through a challenging calendar year where the difficult market conditions, the distraction of the sale of the manufacturing business and significant management changes have all had an impact on results. Having now completed the operational transition to a fully focused branded business with a very strong balance sheet and appointment of a CEO with deep industry experience, the business is well positioned to build scale and deliver further profitable growth."
Looking ahead, the company expects further challenges.
"The board has reassessed its outlook for the rest of the financial year and based on the continuing challenging market conditions and the slower pace of sales in the first half, has reduced its revenue expectations."
As for the deadly coronavirus outbreak, Brand Architekts noted it sources most of its Christmas gifts from China, which are produced from June to August then shipped in September and October.
"We are in close contact with our Chinese suppliers to understand the level of supply risk and possible mitigation options related to the current coronavirus outbreak. At this point we expect to be able to source all required goods, however, we continue to review the situation closely due to the growing uncertainty," the company added.
By Paul McGowan; [email protected]
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