Tandem Group Regulatory News (TND)

Tandem Group plc

(the 'Group' or 'Company')

AGM Trading Statement

Tandem Group plc (AIM: TND), designers, developers, distributors and retailers of sports, leisure and mobility equipment, announces that at the Annual General Meeting of the Company to be held today, the Company's Chairman, Steve Grant, will make the following statement, with the Board maintaining its expectations that the Group will achieve market expectations of performance for the full year.

Trading

We are pleased to report that the Group remains on track to achieve market expectations of performance for the full financial year ended 31 December 2024. However, we continue to navigate a challenging environment marked by increasing freight costs which have more than trebled in recent months, driven by the ongoing conflict in the Red Sea. Additionally, we have experienced some of the wettest seasonal weather on record, further impacting consumer demand. Moreover, high interest rates have persisted longer than anticipated, restricting consumer spending power and presenting another layer of complexity to our market dynamics. Despite these headwinds, our commitment to strategic planning and the Group's resilience continues to position us favourably for the remainder of the year.

Our Freight-On-Board (FOB) sales to date this year are behind those of the prior year, however, this decline was anticipated. Encouragingly, we are now observing a return of retailer confidence, with a noticeable increase in FOB orders being placed in recent months. This uplift in demand aligns with our expectations and positions us optimistically for improved performance in the latter part of the year.

At 31 May 2024, our current sales position overall is marginally ahead of the prior year at 3%. The Group has been focusing heavily on introducing newness to our product range, ensuring that our offerings align with current trends and maintain a high level of innovation.

This strategic focus has borne fruit, particularly in our Toys, Sports, and Leisure division, which has performed well in the domestic market. Despite the earlier mentioned FOB performance, this division is outperforming the prior year by approximately 22%. This strong performance is a testament to our commitment to delivering quality and on-trend products that resonate with consumers.

In Golf, we are pleased to report that despite the challenges of poor weather, turnover including electric golf trolleys (which form part of the eMobility category) was 14% ahead of the prior year.

The bike market continues to present challenges, with the bike season being delayed due to poor weather conditions and high levels of excess stock in the market. Despite these hurdles, our Bicycles division has shown resilience, with sales increasing by 9% to the end of May compared to the same period last year. A standout performer in this division is our range of lightweight children's bikes under the Squish brand, which has seen an impressive 21% improvement over the prior year. This growth highlights the strong appeal and quality of our products, even in a tough market environment.

In our eMobility division, sales to the end of May are down 15% compared to the prior year. This decline is primarily attributed to an exceptionally high volume of distributor bike sales during the March to May period last year. It is important to note that last year, eBike sales tripled in 2023 compared to the same period in 2022, creating a high benchmark for comparison. Despite the current year-on-year decrease, the underlying demand for eBikes remains robust, and we are confident in the long-term growth potential of this division.

We are closely monitoring the evolving regulatory landscape for eScooters. Recently, Ireland has legalised eScooters, and we are hopeful that the UK will follow suit. However, it is uncertain that this issue will be prioritised by UK Government in the immediate aftermath of a UK General Election. Despite this, we continue to support legislation that would establish clear legal guidelines and regulations for electric scooters. Our Group is well-positioned and ready to seize market opportunities as soon as regulatory clarity is achieved.

In our Home and Garden division, sales have decreased by 19% to the end of May compared to the same period last year. As previously mentioned, the weather has played a significant role in this downturn, with average rainfall increasing by 36% compared to the prior year up to the end of May. Additionally, a warmer-than-usual start to the year adversely impacted our sales of heating products. Despite these challenging conditions, we remain committed to investing in this division by introducing innovative and on-trend products.

Outlook

Looking ahead, we anticipate prevailing challenges to persist due to the significant rises in freight costs resulting from the ongoing conflict in the Red Sea. Vessels are now navigating around the Cape of Good Hope as an alternative route, leading to extended shipping times and a shortage of containers. This situation further inflates shipping costs, which could defer our FOB sales as customers reassess their shipping cost considerations. The Group is working diligently to mitigate these effects.

Alongside growing sales into Europe, the Group is also exploring investment opportunities to acquire companies that can complement our existing operations, enhancing our strategic growth. As previously announced, since the year-end, we are pleased that the Group has secured a new five-year bank facility with HSBC. This facility refinanced and replaced all existing loans with HSBC upon drawdown, ensuring financial stability for our future plans and growth initiatives.

We remain focused on driving down supply costs with our Far East suppliers to maintain our margin levels. Our commitment to sourcing innovative products and investing in newness continues to ensure that customers have a fresh and exciting range of products to choose from.

We are pleased with the progress we have made with our new proprietary product brand, MoVe, which is becoming increasingly popular with our customer base. Additionally, our newly developed children's scooter brand, Squishles, which is a brand-new concept in both licensed and non-licensed wheeled toys, combining the latest trend in squishy plush with practical onboard scooter storage, are seeing strong orders.

Our sales in licensed products remain robust, with strong performances from Spider-Man, Bluey, Stitch and Sonic. We are excited to launch new ranges of toys, including licensed bumper cars and Rollacases, which we anticipate will be hugely popular with our customers.

In Golf, we are pleased to be introducing a new range of affordable package sets under our Pro Rider brand. We expect this initiative to further boost sales for entry-level golfers, providing them with high-quality equipment at accessible prices.

We are introducing a new range of electric bikes to complement our already strong offering in this segment. We expect eBike sales to continue to grow, effectively replacing the ever-diminishing demand for traditional mechanical bikes. We have recently added renowned brands such as Cannondale, Gocycle, and Tern to our range of bike brands which are available both in-store and online. Additionally, we continue to proudly grow our partnership with Bikeability with our Squish bikes, allowing us to be involved in helping children learn to ride a bike.

We are optimistic about the prospects for our Home and Garden division. We have previously announced the introduction of new ranges of garden furniture, ceiling fans, awnings, and air coolers, and we expect these products to become increasingly popular as we move into the summer months. These new additions are designed to meet the evolving needs of our customers and to capitalise on the warmer weather, driving sales and enhancing our market position.

We are in the process of agreeing rental of space and 3PL services for part of our new warehouse. This supports our plans for optimal utilisation of capacity within our warehouse facilities.

In summary, despite the challenges presented by increased freight costs, adverse weather conditions, and high interest rates, the Board remains confident in the Group's ability to meet market expectations. We will continue to invest in new products and innovation, ensuring that our offerings stay fresh and aligned with market trends. Additionally, we are committed to forging new partnerships with customers to drive growth and expand our market presence. The strategic initiatives and investments we have outlined, position us well to navigate the current environment and capitalise on future opportunities.

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

Enquiries:

Tandem Group plc

Peter Kimberley, Chief Executive

David Rock, Company Secretary

Telephone 0121 748 8075

Nominated Adviser

Cavendish Capital Markets Limited

Ben Jeynes / Dan Hodkinson - Corporate Finance

Michael Johnson / Charlie Combe - Sales and Equity Capital Markets

Telephone 020 7220 0500

26 June 2024

Forward-Looking Statements

Certain statements made in this announcement are forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Company's current expectations, estimates, and projections about its industry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The Company cautions security holders and prospective security holders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances, or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.