Coats struggles as tough conditions hit threads and zips business

By

Sandra Halliday

Published
Nov 22, 2019

Coats Group, the global threads and zips specialist, said Friday that its sales rose only modestly in the year to date (up to October 31) with a 1% increase on a currency-neutral basis.

The rise was driven by its Apparel & Footwear division that was up 1% and its Performance Materials unit that rose 2%.

And while the growth wasn't that impressive, in the four months from July to October the company said, its currency-neutral performance was even worse. Overall sales had grown 2% in the first half but in that latest four-month period, sales were flat, “reflecting slightly lower activity in both Apparel & Footwear and Performance Materials”. That was against the strong growth of 4% in the comparative period in 2018. 

And on a reported basis, while group sales in the latter period were down 1% year-on-year, this was an improvement on the 3% decline in H1. This improvement was largely due to the anticipated softening of the foreign exchange translation headwinds that it saw in early 2019.

As mentioned, the Apparel & Footwear business didn’t exactly look buoyant and the firm said underlying retail markets remained mixed. Its core threads business delivered growth of 2% in the period, despite these market conditions, with stronger performance in the peak months of September and October. But sales in its zips business were slower than in H1 “due to portfolio rationalisation actions, reporting a mid-single-digit decline”. 

The Performance Materials unit reported higher sales for the period (up 4% in H1, and up 2% year to date), “maintaining performance after a strong period of growth for the same period last year” when they rose 10%. 

And the company added that the challenging market conditions mean it now expects to deliver adjusted operating profit of $196 million to $201 million in 2019, which is only a little up on the previous year.