Consumer products distributor UP Global Sourcing (UPGS) saw its share price collapse on Monday after issuing another damaging profit warning. Coming as the company approaches its first anniversary as a listed company, investors will not be in much mood to celebrate.

Shares in the company have slumped more than 42%, leaving the stock at 34.9p. For context, the company joined the stock market at 128p in March 2017.


Better known as Ultimate Products, the Oldham-based company supplies budget consumer homeware brands. These include ironing boards-to-pedal bins name Beldray, audio equipment under the Intempo brand and British heritage kitchenware electronics Russell Hobbs.

Today's warning says that full year underlying earnings before interest, tax, depreciation and amortisation (EBITDA) will weigh in ‘within a range of £6m to £7m’, well below the £9.1m forecast by analysts at Shore Capital.

Ongoing tough retail market conditions and orders slippage are being blamed.


Intempo Shot Portrait (2)


A disappointing update for the six months ended 31 January reveals sales were down the best part of a third (29%) to £48.4m. This is unsurprising given management’s previous guidance of tough conditions in the general merchandise retail market, causing ‘continued caution from customers on placing orders’, as well as the prior year’s unusually tough sales comparator.

The revenue reverse also reflects the previously announced shifting of £4m-to-£5m of sales from an unnamed European customer into the year to July 2019.


Yet it is Ultimate’s outlook statement that is truly spooking investors, who saw the value of their shareholdings materially eroded by an earlier profit warning coughed-up in September.

Ultimate Products had been pinning its hopes on a post-Christmas sales recovery, where it envisioned converting a plentiful pipeline of new business opportunities with UK supermarkets and discounters.

Unfortunately, while management is ‘pleased with the strength of its pipeline of new business opportunities, many of the resulting orders are now falling in full year 2019’, rather than in this year’s second half.

‘This is due to specific circumstances that are particular to each customer, rather than any one underlying trend’, assures Ultimate Products, though it also warns ‘retailer sentiment with regard to placing general merchandise orders in the short-term has not improved to the extent that the board previously expected’.

UP Global Sourcing - FEB 18


While the shares are taking a fresh pounding on Monday, CEO Simon Showman is ‘encouraged with the progress that we are making in many areas of our business. Of particular note is our expanding German operation, which is progressing ahead of expectations with a number of major retail accounts open and our new showroom due to open in April.’

Nevertheless, Shore Capital slashes its year to July 2018 sales forecast by 14% to £90.25m, reducing its pre-tax profit (PTP) estimate by 34% to £5.3m. That implies a savage 50% year-on-year PTP drop and the broker also sees the dividend being cut from 5.1p to 2.6p.

‘Looking into full year 2019, whilst management is talking positively about the pipeline of new business, and the prospects for Germany in particular, we believe it sensible at this stage to assume a flat underlying sales performance so look for revenue of £94.75m’, writes Shore Capital, forecasting PTP of £5.5m of taxable profits next year, a very modest return to growth.

Issue Date: 12 Feb 2018