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(Alliance News) - Tandem Group PLC on Monday said its growth has slowed since the start of the new year, after a double-digit revenue increase in 2019, while the factories closures due to the coronavirus outbreak in China could crimp supplies.
In addition, the AIM-listed company said Non-Executive Chair Mervyn Keene intends to retire at the end of July after 30 years with the business. Chief Executive Steve Grant will step down from his role and become non-executive chair from August 1.
Grant will be replaced by Finance Director Jim Shears. Tandem said it plans to recruit an additional resource in the finance department as a result.
The sports, leisure and mobility equipment distributor said revenue growth in the six months to the end of 2019 was 15% ahead of prior year. In the first half of 2019, the company reported 27% revenue growth year-on-year. Tandem said the slowdown was due to sustained wet weather in the UK during autumn, as well as economic uncertainties.
As a result, Tandem said its revenue for entire 2019 increased by 20% on the prior year to GBP38.8 million, taking pretax profit "well ahead" of the prior year.
By division, the company said revenue from the toys business was "considerably" ahead of the prior year, thanks to wheeled toy categories and the new Disney contract.
In own brand portfolios, Tandem said it continued to develop its U-Move scooter range which delivered revenue growth of 85%.
Total revenue from the bicycle businesses was down in 2019 compared to 2018, the company said. However, revenue from the Squish bicycle range sold to independent bicycle dealers grew by 33% in the year.
Turning to the consumer business, Expressco Direct, Tandem said revenue in this unit was "slightly" behind the prior year amid garden and outdoor leisure products performing behind expectations. In addition, the company said "the increasingly competitive" online retail environment hurt its margins.
Meanwhile, Tandem said its operating expenses grew by 11% year-on-year due to higher marketing costs in relation to new licences.
However, the company said it has identified new product opportunities with own brands, which it continues to develop.
Looking ahead, Tandem said 2020 has started more slowly, as some of its major clients have carried the prior year's stock forward into this year.
Also, Tandem said the coronavirus outbreak in Asia appears to be a "significant" threat, as a number of factories have not returned to work after Chinese New Year, which delayed the production of orders. It also has made it difficult for Tandem to perform its quality checks.
Tandem shares were trading 7.3% lower in London on Monday at 190.00 pence each.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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