Creightons takes hard “no agreement - no supply” approach on road to earnings recovery
Given the tough set of challenges Creightons outlined in its March results statement, the personal care, beauty, and fragrances producer delivered a “very commendable performance” in the latest six-month trading period to 30 September.
And by that, read flat sales for the period, matching 2021’s £30 million, but included a £2.6 million gain from recent acquisitions, ahead of a year ago’s £0.8 million.
The gross margin dipped to 40.4% from 42.7% “reflecting the ongoing struggle to pass on significant direct cost increases to retailers, contract customers and consumers”.
“We anticipate that selling price improvement now agreed will help the gross margin continue on the upward trend evident in recent months”, it added on a brighter noted.
And, of course, costs have been rising. During the period since 21 November as the company suffered direct annualised increases of around £4 million, “reflecting the scale of the margin challenge”.
But it said high street retailers agreed to take price increases varying from 5% to 15% to stabilise their supply. “No agreement - no supply” has been its abrupt ruling “to ensure our return to profit”. Which leads us to earnings.
The operating profit before exceptional costs dipped to £0.3 million from £2.6 million a year ago. But it noted operating losses in the first four months were turned to operating profit for each of the subsequent months to the end of October, “reflecting the continuing success of the remedial actions taken”.
Operating profit before exceptional costs as a percentage of sales fell 7.7% points to 0.9% and, although small, “this reflects strong signals of a sharp recovery to profit”, it added. Core earnings (EBITDA) was £1.1 million, down from £3.35 million in 2021.
On a more positive note, Creightons said: “Most importantly we can now focus on building sales in all sectors; the most recent success is being listed with two sophisticated high street retailers in the convenience area which are experiencing significant growth.
“In the mass to masstige area we are pushing our three key brands (in the hair, sleep and skin categories) in addition to Emma Hardie in the premium skincare sector. We expect to hold our sales levels for the next six months before we start to build steadily again on a profitable business”.
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