Coats sales grow, expects full year trading in line with expectations

Following an 8 percent first half increase, Coats Group sales growth in the July to October period improved to 11 percent with accelerating growth in footwear and continued momentum in apparel, partly offset by sustained weakness in performance materials.

Commenting on the trading update, David Paja, group chief executive said: “It has been a pleasure to meet many of the Coats team and visit many of our key sites in my first couple of months as CEO. This has confirmed my view that we have a premium quality business, executing well with opportunities for further improvement, and a strong platform for future profitable growth.”

The company said in a release that apparel and footwear divisions continued to benefit from a return to normalised levels of customer buying and inventory patterns, with both divisions showing year-on-year growth of 14 percent and 7 percent against a weaker prior year comparator due to the impact of destocking in 2023.

The performance materials division saw marginal 1 percent increase versus 3 percent decline in the first half but remained impacted by lower order book activity in the personal protection and composites sectors, particularly in the Americas. The company added that the lower capacity utilisation in the Americas continued to negatively impact performance materials margins.

As a result of the strong overall sales growth, alongside continued delivery of the strategic projects, Coats expects to deliver a full year operating margin of around 18 percent.

“In the four months to the end of October the group continued to perform well, led by apparel and footwear. We are confident in the group’s ability to sustain this momentum through the final quarter and consequently in delivering a full year performance in line with market expectations,” added Paja.