Coats back outlook as sluggish footwear offsets modest apparel growth

(Alliance News) - Coats Group PLC on Wednesday retained full-year guidance despite lower footwear sales as "customer caution persisted."

The London-based manufacturer of footwear and apparel materials said group sales fell 1% on an organic basis in the four months to April which it called a "robust" performance against "a solid pre-tariff comparator period".

Apparel revenue was up 1%, "strongly outperforming" the core thread end market, and "continues to win market share" across its portfolio including in China.

But "in line with our expectations", Footwear revenue was 4% lower on an organic basis, "as customer caution persisted and inventory levels remained low".

OrthoLite revenue was lower on-year but Coats said it remains "confident" in its growth prospects.

Group earnings before interest and tax margin was slightly higher than the same period last year, Coats added.

The firm is "monitoring conditions closely" but said "ongoing tensions in the Middle East have not had a material impact on trading to date".

"We will continue to take action as required to mitigate supply chain pressures and raw material and energy cost increases", the FTSE 250 listing added.

The full year outlook remains unchanged with a "modest" second half profit weighting due to expected inflation cost recovery timing. Full year free cash flow generation is expected to remain "strong", enabling the group to continue to reduce leverage into its target range of 1 times to 2x by year-end.

Shares in Coats were 1.8% lower at 80.45 pence each in London on Wednesday morning.

By Jeremy Cutler, Alliance News reporter

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