Inspecs lags expectations due to soft December trading

Globally focused British eyewear specialist Inspecs Group said on Monday that profits for 2023 should rise in double-digits but revenue for the year was flat and its performance was below market expectations.

The company makes a number of in-house brands as well as licensed products for labels including Joseph, Viktor&Rolf, Barbour, Liberty, Superdry, Radley, Temperley, Ted Baker and Talbot Runhof, among others. 

It reports its final results in April but in a trading update for the 12 months to 31 December said it has maintained its focus on margin improvement through 2023 and expects to report a 16.1% increase in unaudited Adjusted Underlying EDITDA to £18 million. That sounds good, but the company said its performance is lagging market expectations “due to softer trading in December”.

It said group revenue of £200.3 million was “broadly flat” on 2022, although in this case broadly flat means a small dip as the prior year saw revenue of £201.3 million. And at a constant exchange rate, revenue fell by £3.2 million to £197.8 million.

But the board “remains positive for 2024 with new accounts and distribution in place”.

The good news from the update was that the company said operational efficiencies drove an increased EBITDA margin on sales in the year, “with continual progress expected in 2024”.

Also, its Vietnam expansion “remains on track and budget, and provides enhanced sustainability, with first production in H1 2024”.

And its Norville losses continue to reduce with “new management growing sales and improving performance”.

Meanwhile its Skunk Works R&D operation “continues to drive innovation and commercial revenues”.

And integration of its US businesses that started in 2023 will “generate synergies within the Americas” during 2024.

The company has also reduced its net debt, despite its capex spend in Vietnam, with “significant cash generation” in 2023.

Post-period end, last week in fact, the group acquired Norwegian distributor, A-Optikk AS, “for a nominal sum”. It said the purchase “marks a resumption of strategic acquisitions, which increase the group’s vertical integration. It will strengthen our Nordic business expansion plans and gives the group a new distribution hub in the Norwegian market”. 

CEO Richard Peck said: “Whilst our revenue performance was affected by a soft market in December, I am encouraged that our focus on operational efficiencies in 2024 delivered an improvement in our margins. The group has also reduced its net debt while investing in significant additional manufacturing capacity for the future, with our new Vietnam facility coming on-stream in H1 2024. 

“Having further strengthened the balance sheet and extended the maturity of our financing facilities, I look forward to driving sales in 2024, whilst continuing our programme of improving operational efficiency and continuing to develop group synergies to enhance our performance.”