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  • Writer's pictureMark Watson-Mitchell

UP Global Sourcing – as supply chain disruption eases overstocking is now reducing

Leading homewares group UP Global Sourcing (LON:UPGS) put on a good trading performance in its first half-year to end January 2023. Demand remained buoyant for its energy-efficient and money-saving products.

Encouragingly, the level of general retailer overstocking experienced during 2022 which, along with the challenging macroeconomic environment, caused retailer customers to be cautious in the size of their forward orders, is now reducing in the UK and more normal patterns of order placing have recommenced.

The 2% increase in the period to £87.6m sales was also driven by the group’s online channels.

Ultimate Products sells to over 300 retailers across 38 countries and specialises in five product categories: Small Domestic Appliances; Housewares; Laundry; Audio; and Heating and Cooling.

Its brands include Salter, Beldray, Progress, Kleeneze, Petra and Intempo, while it also has the cookware licence for Russell Hobbs.

The £136m capitalised company’s products are sold to a broad cross-section of both large national and international multi-channel retailers as well as smaller national retail chains, incorporating discount retailers, supermarkets, general retailers and online retailers.

Group CEO Simon Showman stated that:

"Amidst a tough economic climate, we are delighted that our products, especially those that are energy efficient and money saving, continue to resonate strongly with consumers. Global supply chain disruption has now eased, which has improved stock availability and supported the growing demand from our online customers.

Looking ahead, we expect that the current softness in global shipping pricing, as well as the partial recovery in Sterling, will provide additional relief against the ongoing inflationary backdrop.

We are increasingly excited by the positive impact that our robotics process automation programme is having on our business. Our bottom-up, demand-led approach to automation enables us to concentrate efforts on the items that can most improve productivity, and this will ultimately enhance operating margins and drive an even better customer experience."

Analysts Opinions – 250p ‘fair value’ per share

Clive Black and Darren Shirley, sector analysts at Shore Capital, have estimates for the current year to end July for £169.1m (£154.2m) sales, with adjusted pre-tax profits of £17.0m (£15.8m), worth 14.6p (14.3p) in earnings and a dividend per share of 7.3p (7.1p).

For the coming year they go for £179.2m revenues, £18.4m profits. 15.5p earnings and a 7.8p per share dividend.

Over at Equity Development Chris Wickham and Hannah Crowe are looking for £163.4m sales for this year and £173.3m next year and give a ‘fair value’ rating of 250p on the shares.

They are looking for £16.9m profits, 15.1p earnings and a 7.5p dividend for 2023, then for £173.2m sales, £18.5m profits, 15.6p earnings and a 7.8p dividend for the 2024 trading year.

Conclusion – 200p soon

The continued resilience of group sales was actually quite impressive and displays the wide spread of customers taking its products.

The group’s shares eased 8% to 153p on the news, but have performed very well since we featured the group in late October last year, when its shares were defined as ‘looking too cheap’ at just 95p.

I see the shares now basing before a rise to 200p gets underway.


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