The Character Group expects profit to be ‘significantly higher’ than in 2019
(CCT ) said it expects underlying profitability for the six months ending 28 February 2021 to be ‘significantly higher’ than in 2019 following a strong Christmas period.
The toymaker group noted that the Christmas 2020 trading period had been ‘buoyant’ for the UK toy sector generally, with the UK market reportedly up by around 5% year-on-year.
The Group's UK sales for the four months to 31 December 2020 were up around 25% over the same period in 2019. Meanwhile, international sales in the period were also significantly higher than in the same period last year, with sales to the USA featuring particularly well.
As a result of a more buoyant market, overall Group sales were boosted, with an aggregate increase of over 30% against the comparable period in 2019, the company told investors.
It said major brands and hero lines have sold ‘exceptionally well’ and that this, coupled with ‘a judicious approach to purchases made for the UK market for the start of this year,’ has resulted in its inventory at 31 December 2020 being at its lowest level for over a decade.
Shares in The Character Group have increased by over 35% since the beginning of November 2020 to open 2.35% higher this morning at 435p following the announcement.
The Group has now sold the freehold to its former over-spill warehousing facility in Oldham, Vernon Works, for £3.5m in cash (ex VAT), with completion scheduled for the end of this month. The sale at this price will result in ‘an exceptional profit’ of around £2m, it noted.
Despite the extended lockdowns and logistical difficulties that have arisen from container shortages, delays with shipping from the Far East, congestion at UK ports and the fall-out from Brexit, the group said it still expects to report ‘significantly higher’ profit than in 2019.
However, it still expects 2H of the financial year to be challenging due to the continuance of the lockdowns, restrictions and the continuing effect that the logistical difficulties are having on freight rates from the Far East which have, at times, quadrupled since September.
The Board told investors that it intends to publish its interim results at the end of April 2021.
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