FY2026 trading update: profit up, cash up, and US momentum building
Sanderson Design Group’s year to 31 January 2026 landed in line with expectations, with a clear tilt to the positive. Adjusted underlying profit is set to be at least £5.0 million, up from £4.4 million last year, while net cash climbed to approximately £9.8 million. Revenue was broadly flat in constant currency at £99.5 million, down 1% on a reported basis, as strong international and direct-to-consumer (DTC) growth offset a soft UK.
The story here is operational discipline meeting selective growth. Cost savings are flowing through, cash is building, and the US has re-accelerated in the second half after tariff-related wobbles in Q2. Licensing remains a dependable cash generator, even if the IFRS accounting optics are a little noisy.
Headline numbers and what they imply
| Metric | FY2026 | FY2025 | Change |
|---|---|---|---|
| Total revenue | £99.5 million | £100.4 million | -1% reported; flat constant currency |
| Adjusted underlying profit | At least £5.0 million | £4.4 million | Up at least 13.6% |
| Net cash (31 Jan) | ~£9.8 million | £5.8 million | +£4.0 million year-on-year |
| Licensing revenue (reported) | £10.5 million | £11.0 million | -5% |
| Licensing revenue (underlying) | £9.0 million | £6.6 million (as stated) | +35% |
| DTC sales | £1.8 million | £0.4 million | Strong growth |
Constant currency strips out foreign exchange swings to show like-for-like trading. The profit uplift – despite flat revenue – underlines cost savings taking hold. The net cash build reflects planned inventory reductions, working capital management and controlled capex, giving the Board greater strategic flexibility.
Regional performance: US recovery offsets UK softness
North America back in growth mode
Brand product sales in North America rose 6% in reported currency and 10% in constant currency to £22.3 million. Underlying growth, excluding tariff-related surcharges added to US sales, was 5% reported and 9% at constant currency. The year saw a double-digit start, a Q2 dip on tariff uncertainty, then a strong second-half recovery – momentum is clearly better exiting the year.
UK remains subdued
The UK was down 9% year-on-year at £30.0 million for brand product sales, with subdued trading conditions persisting into H2 as flagged at the half year. That is the main drag on the group’s top line, and a reminder that the home market remains tough.
Northern Europe and Rest of the World steady
Northern Europe edged up 3% to £9.4 million, helped by H2 strength, while Rest of the World was flat at £8.4 million with a better second half aided by contract orders. The international spread is doing its job of cushioning the UK slowdown.
Licensing: solid cash generator despite IFRS optics
Reported licensing revenue was £10.5 million, down 5% from £11.0 million. Under the bonnet, underlying licensing revenue – excluding IFRS 15 accelerated income – rose 35% to £9.0 million (prior year stated as £6.6 million). That growth reflects minimum guaranteed amounts from previously signed deals and revenue above those guarantees – both good for cash.
Accelerated income under IFRS 15 was £6.1 million (prior year stated as £7.3 million). In plain English, some licensing deals require revenue to be recognised upfront for accounting purposes even if cash comes in over time. It can make the headline licensing line look lumpy. The underlying trend matters more here, and it is encouraging.
Notable licence activity included renewals and extensions with Ruggable – broadening its product range and adding Morris & Co. Huntington designs – and Sangetsu, which extended the Morris Chronicles agreement for a further five years.
Manufacturing: third-party revenue up and near break-even
Third-party manufacturing revenue rose 5% to £18.9 million as order book momentum improved in H2. Internal manufacturing revenue, which is eliminated at the Group level, fell to £10.8 million. The key point: cost-saving and efficiency initiatives have “transformed” the financial performance and flexibility of the manufacturing operations, which are expected to be slightly above break-even for the year – exactly in line with the Group’s target.
Note for readers: the Group’s total revenue of £99.5 million includes only external manufacturing revenue – internal sales between Group entities are excluded to avoid double-counting.
DTC: small today, scaling fast with Morris & Co. leading
DTC sales jumped to £1.8 million from £0.4 million, driven primarily by Morris & Co. and strong US uptake from new customer audiences. The Group now has DTC websites for all brands, with the Morris & Co. site live in the UK since September 2024 and in the US since March 2025, followed by Sanderson, Harlequin, Clarke & Clarke and most recently Zoffany.
It is early days in absolute scale, but the growth rate is striking and strategically important – DTC tends to offer richer customer data and, over time, can support better margins.
Leadership hires aimed at digital and US growth
Two senior appointments support the strategy: Charlotte O’Sullivan joins as Group Digital & Innovation Director to accelerate DTC and broader digitalisation, and Scott Christopher Hans becomes President of North America, having joined as SVP of Sales in November 2024. The focus is exactly where the growth is: the US and digital.
Why this update matters for investors
- Profit growth with flat revenue shows cost actions are working – at least £5.0 million profit is a clean step up from £4.4 million.
- Cash generation is robust – net cash of ~£9.8 million provides resilience and optionality.
- US growth re-accelerated in H2 – tariff noise eased and surcharges helped protect economics.
- Licensing is doing the heavy lifting on cash, even if IFRS timing mutes the reported line.
- DTC is scaling quickly from a low base and could become a more meaningful growth lever.
- UK remains a headwind – recovery there is not in the numbers yet.
Outlook and what to watch into full-year results
Management sees “increasing momentum” into the new year, particularly in the US, manufacturing and DTC, while UK trading remains subdued. The brand portfolio, archive and cash position are highlighted as strategic strengths. Full-year results are expected in late April 2026.
Key things to monitor
- US trajectory and tariff backdrop – underlying growth excluding surcharges is the purer read.
- Licensing pipeline – renewals and new signings that support underlying cash flow.
- DTC contribution – revenue growth and any commentary on margins and repeat customer behaviour.
- Manufacturing profitability – sustaining break-even or better after the H2 improvement.
- Cash and working capital – whether inventory reductions and capex discipline continue.
Bottom line: a disciplined step forward
This is a tidy update from Sanderson Design Group. Profit is up meaningfully, cash is up materially, and the growth levers – US, licensing, and DTC – are turning. The UK remains tough and reported licensing is noisy due to IFRS timing, but the direction of travel looks constructive.
If management can carry H2 momentum into FY2027 while keeping a tight grip on costs, there is room for further profit progress. We will get the fuller picture with detailed numbers and margins in late April.
