Pittards sales rise but profits are slim
today Sep 26, 2017
High-end leathergoods and technically advanced leather materials supplier Pittards had an encouraging first half with revenues up 6% to £14.2 million as its plan to operate a more diversified business start to pay off.
But while the company said that its gross profit margin improved to 23.6% from 22.7% a year ago, its pre-tax profit was only £0.1 million, worse than £0.4 million in H1 a year ago. And profit on an Ebitda wasn’t particularly impressive either. It hit £0.7 million this time, which was at least better than the £0.4 million in the second half of last year, although it was lower than the first half of 2016. Still, the company reduced its net debt to £1 million from £10.1 million as of December 31 2016.
Chairman Stephen Yapp said the company continued to make solid operational and strategic progress while delivering “a profitable first half performance which improved upon the previous six months.”
He also said that “recent discussions and heightened sampling activity demonstrate that our strategic roadmap for developing an increasingly diversified business model will provide not only revenue and profit growth but a more balanced business positioned to take advantage of the changing landscape.”
So how exactly does Pittards plan to get to a position where it can report strong profits as well as higher sales? It said it has identified its priority markets for growth as being performance gloves, footwear, lifestyle and interiors.
“There are nascent signs that we have reached the bottom of the prolonged downward trend experienced in recent years and consumer demand for our technically advanced leathers within these markets has started to recover,” it explained.
The company, whose products are stocked in Harrods, has refined its objectives in these markets and said “our initial thoughts have been endorsed in advanced customer discussions. This has been further evidenced by an increase in sampling activity which typically occurs towards the end of what can be a protracted two-to-three year negotiation process.”
As far as the higher sales figure was concerned, the company said that it was due to increased sales activity in the UK division. The UK has seen sales increases in most market sectors and in particular the shoe market.
Meanwhile, in Ethiopia, orders in its core market for work gloves increased and in line with its targeted new market, it has delivered some small “but strategically important” initial orders for men's footwear.
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