Coats Group PLC on Wednesday said its trading in the first four months of 2023 was in line with expectations as it reported a 12% revenue decline against the previous year.
Coats is a Bristol-based manufacturer of industrial thread and footwear components. It is a constituent of the FTSE 250 index.
In the four months to April 30, Coats reported that revenue declined 12% against the prior year and 7% on a constant currency basis.
Total revenue declined 20% year-on-year on a organic constant currency basis. The company said this reflected the continuation of widespread industry destocking in apparel and footwear, as well as customer contract in-sourcing in its Performance Materials segment.
By segment, Apparel saw the largest year-on-year decline in revenue at 27% on a reported basis. Coats said this continued the trend seen in the final quarter of 2022, with destocking by customers adjusting to ‘more subdued’ consumer demand and excess inventory levels.
Footwear, by contrast, saw revenue grow 58% against the previous year on a reported basis. Coats noted that this was thanks to the first time contribution from the acquisitions of Texon and Rhenoflex.
Last June, Coats bought athleisure footwear component provider Texon for $211 million in net cash. It agreed to buy Rhenoflex, a maker of sustainable structural materials for the footwear industry, for an enterprise value of €115 million in August last year.
Looking ahead, Coats said it continues to anticipate its 2023 to be in-line expectations, with a second-half weighting underpinned by the contribution from acquisitions and strategic projects.
‘With a significantly strengthened commercial and operational platform, the group remains very well-positioned in its markets, as the global partner of choice for winning brands and with a clear leadership position in innovation and sustainability. Consequently, we remain excited about the growth and margin opportunities across the group over the medium term, with improved cash generation providing an additional catalyst to our strategic ambitions,’ Coats said.
Shares in Coats were down 3.7% at 70.30 pence on Wednesday morning in London.
Coats will release its interim results on August 1.
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