Sanderson Design Group – major licensing deal with NEXT lifts shares 15%
The £97m capitalised Sanderson Design Group (LON:SDG) has announced a major licensing agreement for its Clarke & Clarke brand with NEXT to exclusively produce a range of its homeware products, such as bedding, towelling, tableware, furniture and lighting.
The five-year deal starts in 2024 and extends still further the commercial liaison with the major retailer, following on from the NEXT agreement with the group’s Morris & Co brand for womenswear.
The Brands and Operations
Sanderson Design is a luxury interior furnishings group that designs, manufactures and markets wallpapers, fabrics and paints.
Its brands include Zoffany, Sanderson, Morris & Co., Harlequin, Scion, Clarke & Clarke and Archive by Sanderson Design.
It also derives licensing income from the use of its designs on a wide range of products such as bed and bath collections, rugs, blinds and tableware.
Its products are sold worldwide, while it has showrooms in London, New York, Chicago, Amsterdam and Dubai.
CEO Lisa Montague stated that:
"We are delighted to sign this master licensing agreement with NEXT for Clarke & Clarke, marking a significant strategic development for the brand. Clarke & Clarke is already the Company's largest brand by revenue and this agreement brings further multi-year income potential along with the endorsement of a major UK retailer.
We look forward to working closely with NEXT during the year ahead on the broad and exciting range of homeware products covered by the agreement."
The group should be announcing its results for the year to end January 2023 in early April.
Analyst Opinion – 205p Target Price
Analyst Matthew McEachran at Singer Capital Markets rates the shares as a Buy, looking for a 205p Target Price.
He is estimating £112.3m (£112.2m) sales for the last year, with £12.7m (£12.5m) adjusted pre-tax profits, earnings of 13.8p (13.0p) and a dividend of 3.69p (3.50p) per share.
For the current year his figures suggest £116.1m revenues and a fall back in profits to £12.0m, with 12.7p earnings and a 3.69p per share dividend.
Conclusion – Treading water until April finals
The group’s shares may well react favourably to any updating of current year and then 2025 estimates when the finals are reported.
In the meantime, the shares are 15% better at 135p on the news, but could well trade in the 120p to 140p price range for a short while.