The company behind major household brands such as Russell Hobbs and Salter saw its share price plummet on Monday after a reporting a huge dip in takings over the last six months.
Revenue fell to £48.4 million in the six months up to January 2018 for UP Global Sourcing Holdings, known as ‘Ultimate Products’, down on the £68.1 million it made in the first half of 2017 according to its latest trading update.
The firm markets a range of household products including Russell Hobb kitchen appliances, Beldray hoovers, George Wilkinson cookware and Dreamtime bedding but has struggled to secure orders from big retailers as cautious high street sentiment bites.
Ultimate Products says it is struggling as major retailers scale back on orders amid ongoing uncertainty over how keen high street shoppers will be to spend
Underlying earnings for 2018 are expected to come in at between £6 million and £7 million it said, below what the market had expected.
The news sent shares in the FTSE All-Share company plummeting 40 per cent in the first hour of trading.
‘Retailer sentiment with regard to placing general merchandise orders in the short-term has not improved to the extent that the board previously expected,’ the company update said.
‘Furthermore, the continuing lower volumes available to non-food suppliers, along with retailers’ desire to minimise increases in retail prices, has created an even more competitive environment than normal.’
The group, established in 1997, said between £4 million and £5 million of revenue was hit by the ‘one-off impact’ of a change in trading costs with a ‘key European customer’.
Its website says it works with more than 300 retailers across 38 countries.
Household names: Ultimate Products distributes Russell Hobbs toasters and kettles to major retailers
UP’s results said first half of 2017 had also been an ‘unusually strong period’ for the group with positive retailer sentiment, which it claims could make figures for the first half of 2018 appear weaker.
However it also pulled back on its previous prediction that revenue would grow in the second half of 2018 after much of its new business and orders were pushed back to 2019, but said it had ‘comfortable’ levels of funding headroom of some £8 million as of January.
Simon Showman, CEO of Ultimate Products, said: ‘These are tough market conditions for the general merchandise sector and we, like many others, are having to adapt to a more uncertain environment for both retailers and consumers.
Kitchen gadgets: The majority of UP’s products are major household brands which specialise in gadgets and labour-saving devices
‘However, we are encouraged with the progress that we are making in many areas of our business. Of particular note is our expanding German operation, which is progressing ahead of expectations with a number of major retail accounts open and our new showroom due to open in April.’
He added: ‘While the short-term outlook for the second half of this financial year is undoubtedly challenging, we are pleased with the pipeline of new business opportunities that is already in place for full-year 2019.’
The share price was first hit by a warning on growth this year back in September 2017.
The group’s first assertion that revenues would struggle this year sent its share price down more than 50 per cent to a ‘low’ of between 106p to 104p.
On Monday the shares traded lower again, down to 35p to 36p.