Tandem Group
plc
(the
'Group' or 'Company')
AGM Trading Statement
Tandem Group plc (AIM: TND),
designers, developers, distributors and retailers of sports,
leisure and mobility equipment, announces that at the Annual General Meeting of the Company to
be held today, the Company's Chairman,
Steve Grant, will make the following statement, with
the Board maintaining its expectations that the
Group will achieve market expectations of performance for the full
year.
Trading
We are pleased to report that the
Group remains on track to achieve market expectations of
performance for the full financial year ended 31 December 2024.
However, we continue to navigate a challenging environment marked
by increasing freight costs which have more than trebled in recent
months, driven by the ongoing conflict in the Red Sea.
Additionally, we have experienced some of the wettest seasonal
weather on record, further impacting consumer demand. Moreover,
high interest rates have persisted longer than anticipated,
restricting consumer spending power and presenting another layer of
complexity to our market dynamics. Despite these headwinds, our
commitment to strategic planning and the Group's resilience
continues to position us favourably for the remainder of the
year.
Our Freight-On-Board (FOB) sales to
date this year are behind those of the prior year, however, this
decline was anticipated. Encouragingly, we are now observing a
return of retailer confidence, with a noticeable increase in FOB
orders being placed in recent months. This uplift in demand aligns
with our expectations and positions us optimistically for improved
performance in the latter part of the year.
At 31 May 2024, our current sales
position overall is marginally ahead of the prior year at 3%. The
Group has been focusing heavily on introducing newness to our
product range, ensuring that our offerings align with current
trends and maintain a high level of innovation.
This strategic focus has borne
fruit, particularly in our Toys, Sports, and Leisure division,
which has performed well in the domestic market. Despite the
earlier mentioned FOB performance, this division is outperforming
the prior year by approximately 22%. This strong performance is a
testament to our commitment to delivering quality and on-trend
products that resonate with consumers.
In Golf, we are pleased to report
that despite the challenges of poor weather, turnover including
electric golf trolleys (which form part of the eMobility category)
was 14% ahead of the prior year.
The bike market continues to present
challenges, with the bike season being delayed due to poor weather
conditions and high levels of excess stock in the market. Despite
these hurdles, our Bicycles division has shown resilience, with
sales increasing by 9% to the end of May compared to the same
period last year. A standout performer in this division is our
range of lightweight children's bikes under the Squish brand, which
has seen an impressive 21% improvement over the prior year. This
growth highlights the strong appeal and quality of our products,
even in a tough market environment.
In our eMobility division, sales to
the end of May are down 15% compared to the prior year. This
decline is primarily attributed to an exceptionally high volume of
distributor bike sales during the March to May period last year. It
is important to note that last year, eBike sales tripled in 2023
compared to the same period in 2022, creating a high benchmark for
comparison. Despite the current year-on-year decrease, the
underlying demand for eBikes remains robust, and we are confident
in the long-term growth potential of this division.
We are closely monitoring the
evolving regulatory landscape for eScooters. Recently, Ireland has
legalised eScooters, and we are hopeful that the UK will follow
suit. However, it is uncertain that this issue will be prioritised
by UK Government in the immediate aftermath of a UK General
Election. Despite this, we continue to support legislation that
would establish clear legal guidelines and regulations for electric
scooters. Our Group is well-positioned and ready to seize market
opportunities as soon as regulatory clarity is achieved.
In our Home and Garden division,
sales have decreased by 19% to the end of May compared to the same
period last year. As previously mentioned, the weather has played a
significant role in this downturn, with average rainfall increasing
by 36% compared to the prior year up to the end of May.
Additionally, a warmer-than-usual start to the year adversely
impacted our sales of heating products. Despite these challenging
conditions, we remain committed to investing in this division by
introducing innovative and on-trend products.
Outlook
Looking ahead, we anticipate
prevailing challenges to persist due to the significant rises in
freight costs resulting from the ongoing conflict in the Red Sea.
Vessels are now navigating around the Cape of Good Hope as an
alternative route, leading to extended shipping times and a
shortage of containers. This situation further inflates shipping
costs, which could defer our FOB sales as customers reassess their
shipping cost considerations. The Group is working diligently to
mitigate these effects.
Alongside growing sales into Europe,
the Group is also exploring investment opportunities to acquire
companies that can complement our existing operations, enhancing
our strategic growth. As previously announced, since the year-end,
we are pleased that the Group has secured a new five-year bank
facility with HSBC. This facility refinanced and replaced all
existing loans with HSBC upon drawdown, ensuring financial
stability for our future plans and growth initiatives.
We remain focused on driving down
supply costs with our Far East suppliers to maintain our margin
levels. Our commitment to sourcing innovative products and
investing in newness continues to ensure that customers have a
fresh and exciting range of products to choose from.
We are pleased with the progress we
have made with our new proprietary product brand, MoVe, which is
becoming increasingly popular with our customer base. Additionally,
our newly developed children's scooter brand, Squishles, which is a
brand-new concept in both licensed and non-licensed wheeled toys,
combining the latest trend in squishy plush with practical onboard
scooter storage, are seeing strong orders.
Our sales in licensed products
remain robust, with strong performances from Spider-Man, Bluey,
Stitch and Sonic. We are excited to launch new ranges of toys,
including licensed bumper cars and Rollacases, which we anticipate
will be hugely popular with our customers.
In Golf, we are pleased to be
introducing a new range of affordable package sets under our Pro
Rider brand. We expect this initiative to further boost sales for
entry-level golfers, providing them with high-quality equipment at
accessible prices.
We are introducing a new range of
electric bikes to complement our already strong offering in this
segment. We expect eBike sales to continue to grow, effectively
replacing the ever-diminishing demand for traditional mechanical
bikes. We have recently added renowned brands such as Cannondale,
Gocycle, and Tern to our range of bike brands which are available
both in-store and online. Additionally, we continue to proudly grow
our partnership with Bikeability with our Squish bikes, allowing us
to be involved in helping children learn to ride a bike.
We are optimistic about the
prospects for our Home and Garden division. We have previously
announced the introduction of new ranges of garden furniture,
ceiling fans, awnings, and air coolers, and we expect these
products to become increasingly popular as we move into the summer
months. These new additions are designed to meet the evolving needs
of our customers and to capitalise on the warmer weather, driving
sales and enhancing our market position.
We are in the process of agreeing
rental of space and 3PL services for part of our new warehouse.
This supports our plans for optimal utilisation of capacity within
our warehouse facilities.
In summary, 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. 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.
This announcement contains inside
information for the purposes of the UK Market Abuse Regulation and
the Directors of the Company are responsible for the release of
this announcement.
Enquiries:
Tandem Group plc
Peter Kimberley, Chief
Executive
David Rock, Company
Secretary
Telephone 0121 748 8075
Nominated Adviser
Cavendish Capital Markets
Limited
Ben Jeynes / Dan Hodkinson -
Corporate Finance
Michael Johnson / Charlie Combe -
Sales and Equity Capital Markets
Telephone 020 7220 0500
26 June 2024
Forward-Looking
Statements
Certain statements made in this
announcement are forward-looking statements. These forward-looking
statements are not historical facts but rather are based on the
Company's current expectations, estimates, and projections about
its industry; its beliefs; and assumptions. Words such as
'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,'
'estimates,' and similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of
future performance and are subject to known and unknown risks,
uncertainties, and other factors, some of which are beyond the
Company's control, are difficult to predict, and could cause actual
results to differ materially from those expressed or forecasted in
the forward-looking statements. The Company cautions security
holders and prospective security holders not to place undue
reliance on these forward-looking statements, which reflect the
view of the Company only as of the date of this announcement. The
forward-looking statements made in this announcement relate only to
events as of the date on which the statements are made. The Company
will not undertake any obligation to release publicly any revisions
or updates to these forward-looking statements to reflect events,
circumstances, or unanticipated events occurring after the date of
this announcement except as required by law or by any appropriate
regulatory authority.