A tough trading period for Walker Greenbank (WGB) has forced the company's bosses to rethink the strategy. Chief executive John Sach said the past year hadn't been easy in the wake of the Brexit vote, and while he’s not putting all the blame on the decision to leave the EU, he says "it hasn’t helped”. High streets are seeing less footfall, people aren't bothering to update furnishings or decorations in light of a soft housing market, and the prospect of rising interest rates could further squeeze consumer spending. The shift to online shopping hasn't been much of a boon for Walker Greenbank either, since customers are less likely to buy products such as paint or wallpaper without seeing them first
The situation hasn't improved since the period end. Brand sales fell 8.3 per cent during the first nine weeks of the financial year, while international sales were down 6.1 per cent at constant currency. As such, the board now expects FY2019 profits to be ahead of this set of results, but short of previous expectations.
To remedy the current state of affairs, management will focus on the international business and the “higher margin” licensing division. The company previously stated it was aiming for around 60 per cent of brand sales to come from overseas, compared to 43 per cent now.
Admittedly, the acquisition of Clarke & Clarke was the saving grace for these numbers. The first full-year contribution from the furnishing company meant statutory profits from operations rose 78.6 per cent to £14m. Had it not been for the acquisition, chief financial officer Mark Gant said the core business would have reported a decline.
Analysts at Investec expect pre-tax profits of £12.8m in the year to January 2019, giving EPS of 14.4p, compared with £12.5m and 14.4p in FY2018.
| WALKER GREENBANK (WGB) | ||||
| ORD PRICE: | 128p | MARKET VALUE: | £ 90.4m | |
| TOUCH: | 124-131p | 12-MONTH HIGH: | 244p | LOW: 119p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 87p* | NET DEBT: | 9% | |
| Year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 78.4 | 5.5 | 8.6 | 1.85 |
| 2015 | 83.4 | 6.3 | 8.6 | 2.31 |
| 2016 | 87.8 | 7.3 | 9.8 | 2.89 |
| 2017 | 92.4 | 7.0 | 8.6 | 3.61 |
| 2018 | 109 | 12.8 | 16.7 | 4.37 |
| % change | +18 | +84 | +95 | +21 |
| Ex-div: | 19 Jul | |||
| Payment: | 10 Aug | |||
| *Includes intangible assets of £31.8m or 45p per share | ||||
