All good points but I don’t know the answer-they’ve hung their hat on American growth but it’s not exactly great there either |
Why was digital wallpaper printing only 19% of their production, with 81% being via traditional methods?. Isn't it the digital printing that they've invested heavily in too. Okay it's improved now to 27% but why do low, the digital printing for curtains is a lot higher. But combined is only about 52% (by my calcs) of total production.Don't tell me that a lot of their wallpaper designs aren't suitable for digital printing?, surely not. |
I still hold a little less than 2 percent of Colefax and about .5 percent of SDG -done very well in Colefax and now even to slightly down on Sdg having bought at various levels 37 pence to just over a pound (should have sold when they were over 2 pounds but that’s life!)but now regretting some of the Colefax I sold at 2.30!Somehow they need to move the dial somehow and get the capacities up in the factories-looking back they seem to have paid far too much for Clarke and Clarke -even with all these licences and celebrity tie ups they don’t seem to be moving the dial much-Lisa Montague seems a very clever and engaging lady I always thought she had a bigger plan for the group-the answer is and Disco Dave is correct in asking where is the growth or have they boxed themselves in with their manufacturing?? |
salver, as you hold both and I'm aware you held about 2% of CFX at one stage (a wealthy gentleman!) - you are in a unique position to give a view here. |
Yes they haven’t really gone anywhere for 25 years just stayed at a low PE bought back shares and ran a very tight ship-when I first bought them there were something like 33 million shares in circulation and now there are about 6.2 million |
salver, you beat me to it.
CFX has little revenue growth, you can look back 20 years plus with that business.
Yet they have maintained profitability.
(I'm ignoring their huge increase in buy back driven EPS).
Colefax generate oodles of cash on modest revenues
and pretty much static turnover. |
Well Colefax have always been a consistent performer-up about 11-12 fold on my purchase price 26 years ago -they don’t seem to have many problems -65 percent of their business is in the states-they announced recently that their sales were down 12 percent in UK -Colefax are even more high end than Sanderson Group -the main difference is they don’t manufacture like Sanderson |
Up 5% on my purchase from yesterday. Could see another 5% soonish. Yield good at these levels. |
Sorry but completely disagree, it's a classless / open market. SDG just chose to target high end and it's not working. |
Wallpaper used to be a very working class market, covering dodgy walls with cheap surface print design.
Now it is a middle class market. Often just feature walls with good designs at high prices. But it is a fashion market competing with Farrow and Ball etc. That's why a good geographical spread is important as the cycles are different in different markets.
The UK market is down and SDG have exited the top end Russian market but are doing well in the US albeit at small scale. |
Who's going to pay £359 (sale now £251) for the paper below? (Just a one minute look so sure there's paper even more expensive and IMO even more repulsive!). IMO there digital printing is not gaining any productivity compared to traditional, they target high end which clearly has been suffering so they need to expand their customer base IMO.Https://wallpapersales.co.uk/217327-pygmalion-sanderson-x-giles-deacon-mural |
Shanklin - its wallpaper that's going out of fashion - curtains is a very small part of the business
And I agree - sales to me is the issue.
They're producing (stocks up) but they can't flog the stuff |
 Lot of discussion about operations, but I think the problem is sales and marketing. I took a trip round their shiny new website las night. Sad to say, but it's like a tastefully decorated mausoleum, and is more likely to put buyers off than entice them into visiting a store.
The home page is for investors, not buyers, which is weird, and it then has a link to each of the brands. The brand pages each have a link to the home site for that brand, and if you're interested it's worth opening all six of them up in separate tabs. Only one of the brands has either sound or movement, and even that's only some prat wandering round the factory. The Tiktok/youtube generations are likely to find it a complete turn-off - I dread to think what it looks like on a phone rather than my big screen.
I don't think the website is that important as a shop (although maybe it could be) but it's got to excite viewers enough to get them to a stockist, and in my view it fails at that. I suspect it's indicative of an attitude that's stuck in the V&A archives - someone needs a sharp kick up the backside... |
Is their problem primarily that curtains are going out of fashion? Or are their designs not as popular as they used to be? |
Ditto
But for the licensing income they'd be loss making
So once these new licences are signed even with cost savings they'll need decent revenue growth to make any margin (as licensing income is so front end loaded) |
Barnes, LM has been exceptional in driving licencing revenue, however running the core business may require a different skill set.
I've said here over the last year they arguably need a COO with restructuring experience.
A terrible outcome if someone gets to scoop up the business for peanuts. |
Their revenue in 2009 was £60m and their profit was £1.5m implying fixed cost base of around £40m.
It looks as if their revenue and fixed cost base have both risen by about 70% so they have had no benefit from the increase in revenue.
Goods and services inflation over that period was about 55%. Wage inflation about 60%.
I think we are in agreement that their fixed cost base needs attention. They have much simplified their brands but have complicated (or invested) elsewhere. I suspect they have invested in sales, marketing and distribution which isn't paying off yet. |
I cant find the numbers atm, but the above is an article from 2009 on their FY pre close statement.
They were both cash generative and profitable in one of the worst consumer downturns many have experienced.
What's happened since?, a far more complex core business would be my guess. |
"With a 10% increase in revenue to £123m, profit would be £18m ie 14% of revenue."Revenue CAGR for the last 6 years has been negative, their income isnt growing!, so whilst completely agree about how nice a 10% increase in income would be and a 10% cut in fixed costs to significantly impact bottom line, the truth is there's zero signs that either will be happening in the near future. Their total Opex costs as a percentage of sales has been increasing over the past few years. Okay that may be inflationary, minimum wage, energy etc, but even so it's a very tall order. |
Yes I bought into this business as WGB four years ago at 57p and have followed it since. I used to work in the wallpaper business many years ago and I know the Chair of SDG - in fact she used to work for me. She is first class and one of the reasons I bought into this business.
Because of the high revenue gearing and the fact that it is a fashion industry, it is a roller-coaster ride. We are in a dip at the moment and it's not a nice feeling. But I'm holding on for the next dizzy heights! |
Barnes, you are no doubt aware of history as WGB (before the name change).
This was priced to go bust during the GFC,
I can remember the share price around 8 pence, it may have traded even lower.
But an interesting aspect of looking back at the financial history, in light of current trading, is they stayed profitable throughout the GFC.
At the time licensing revenue was pretty much non existent (from memory). |
Gross margin is about 66% and fixed costs are about £68m so this business is very revenue sensitive. That's a problem with a fashion business. But also an upside opportunity.
Including the licence income I calculate that breakeven revenue is about £96m.
With revenue of £112m (last year), profit was £11m ie 10% of revenue.
With a 10% increase in revenue to £123m, profit would be £18m ie 14% of revenue.
A 10% reduction in fixed costs adds £7m to profit.
A reduction in fixed costs is more controllable than an increase in revenue.
But taken too far will damage revenue.
So you can see what the challenge is, and also the potential rewards.
I'm sure the management can too. |
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