I want to start a thread on Sanderson Design Group. I have shares in this company. and have held them now for several years.
What used to be Walker greenback, they create coverings and furnishings for the home. They own a portfolio of brands and the jewel in the crown is probably Morris and Co.
new CEO who comes from a luxury goods background
Licensing deals with Next, National Trust
A move away from B2B and greater focus on selling direct to consumer
Recent ‘ahead of expectations’ guidance.
a revamp of all sub domains
The new websites for the Zoffany, Sanderson, Morris & Co., Harlequin, Scion, Anthology and Clarke & Clarke brands can all be accessed via the corporate site www.sandersondesigngroup.com. These new websites are in line with the Company’s strategy of elevating its brands, thereby creating an engaging experience for consumers and driving sales to trade customers.
Each website underlines the individuality of the brand, providing images, sampling and other product information to inspire consumers. The site addresses are listed here:
· Zoffany: https://zoffany.sandersondesigngroup.com/
· Sanderson: https://sanderson.sandersondesigngroup.com/
· Morris & Co: https://morrisandco.sandersondesigngroup.com/
· Harlequin: https://harlequin.sandersondesigngroup.com/
· Anthology: https://anthology.sandersondesigngroup.com/
· Clarke & Clarke: https://clarke-clarke.sandersondesigngroup.com/
cost savings initiatives introduced. which could help bottom line
Licensing revenue equally have a geared effect on sales.
“With the Morris & Co brand, NEXT will produce apparel, including womenswear, men’s shirts and childrenswear, with an anticipated launch date of June 2021.
With the Sanderson and Sanderson Home brands, NEXT will produce an exciting range of homeware. These products are expected to be launched following the Morris & Co apparel launch.”
£ millions unless stated
historically operating margin was high single digits, and even peaked in 2017 and 2018 to 10.7% of turnover
if we assume the new initiatives can cause an increase in margins and work on the forecast turnover figures we get
2022 = £102.9m 11m op profit
2023 = £111.8m 11.9m op profit
divide by shares in issue (71m)
come at it another way. look at historical earnings breakdown, last 5 years.
for this year f/c is 7.3p EPS. Company has announced it is ahead: On 21 Jan said *“*This performance in both brand product sales and manufacturing has resulted in revenues being ahead of Board expectations and which, owing to the Group’s operational gearing and the cost savings already implemented, has translated largely into profit. The Board now expects profit before tax for the year ending 31 January 2021 to be not less than £6.3 million. ”
take that £6.3m and divide by 71m shares = 0.088p (9p rounded)
say they beat on this, as the wording is at least, so add on another ~10% = 9.8p and split that fairly arbitrarily, for sake of argument through the two haves of the 2021 year (4.8p H1 and 5p H2 [ i know this isn’t correct but for sake of argument])
put the 9.8p on a growth PE of say 17 and I derive a target of £1.67, above today’s £1.08p
Extrapolate a further year out and assume H1 grows by an average of the previous 2 years and H2 at the same rate as for former year . This gives me (H1 5.1p EPS and H2 7.8 EPS) or 2022 fc 12.7p again on a 17 times rating I get £2.15p
I know my workings are rudimentary and ignore a raft of other data, but just trying to throw up some potential scenarios for discussion.
I have tried to come at this from a few simplistic modelling directions to try and give a view the share price could be materially undervalued given the step changes in train in strategy, and the announcements they are ahead of forecasts
Sorry it is a rushed post. I will try and refine over time, but wnated to get something up quick to kick off discussion. Comments, thoughts and contributions are welcomed