Directors of Smart Garden Products recognise that sales up +65% to over £100m in the year to November 2021 are exceptional and due to covid related windfalls. Total sales rose from £66.3m to £109.1m in the 12 months.
The increase in sales generated a much higher cash margin enabling the company to absorb most of its increased costs and deliver increased profits. Profit before interest and tax rose from £10m to £13.2m.
The report says that gardening industries across the globe benefitted enormously from excess demand in 2021, fuelled by Covid lockdowns and the unprecedented government support for families and businesses. This placed enormous strain on Asian supply chains, particularly from China and India.
Jonathan Stobart, Smart Garden’s managing director said “Freight costs were hugely inflated during 2021, and indeed into 2022. However, a near doubling of Smart’s sales in both the UK and Europe enabled us to absorb that cost and protect our customers’ sales and margins, whilst also increasing our profits.”
The director’s report recognised that these are exceptional windfalls and that the markets will gradually return to more normal trading patterns in future years. However, it adds, the company's extensive product offering, its economies of scale and year-round sales will continue to generate real growth in future years.
Stock rose to £21m at the end of November 21 over double the £8.2m at the beginning of the year.
2022 weakness
Commenting on sales subsequent to the accounts Jonathan Stobart said, “Despite a very strong 2022 sell-in due to our customers replenishing severely depleted inventories, retail sales subsequently proved to be much weaker than 2021.
“This was because restrictions on all retailers were lifted and normal spending patterns restored, whilst the war in Ukraine and its inflationary consequences dampened discretionary spending. We believe this weakness may continue into 2023 whilst inventories are normalised, before we see a rebound in 2024.”