Portmeirion is a company that defies most preconceptions of what should make a successful British business. Apart from its well known ceramic designs, it also sells glassware, textiles, placemats, trays and candles.
Now you would think that such a business would just about manage to struggle on if it had everything made in the lowest cost manufacturing country it could find, and sold it back to loyal UK customers who did not mind paying a bit over the odds.
In fact Portmeirion’s business model is quite the opposite, and it is doing the business no harm. Two-thirds of its products are made in Stoke-on-Trent and rather than relying upon the loyalty of British customers, it makes 70% of its sales outside the UK with the principal markets being America which takes 39% of sales, and Korea which takes 17%. And Portmeirion is certainly not fading away. Last year it grew its sales by an eye-catching 16%.
Portmeirion has turned itself around
With the stock market now offering some attractive dividend yields I have been drawing up a list of shares that could one day give me a nice retirement income, and Portmeirion certainly qualifies.
Having declared a dividend of 14.7p for the 2007 financial year the shares yield a net 5.7% at their offer price of 260p – down from a high of 350p a year ago – and there is every chance that the dividend will be raised this year.
So I am thinking of renewing my association with this company, having held the shares a few years ago. I gave up on them because the company seemed to be going nowhere. Sales were stagnating, the dividend although attractive was never raised from one year to the next, and Portmeirion seemed to be very slow to grasp the nettle of transferring at least part of its production to the Far East.
In short, Portmeirion seemed to be in slow decline, and making me even more dubious was the product itself, which struck me as the sort of thing that I might give to someone as a present but hope never to receive myself.
The product’s appeal
Partly through acquisition, and partly through sponsoring designers such as Sophie Conran, Portmeirion has broadened out its product range in the last few years, but still around half of its sales are based on its classic Botanic Garden, Pomona and Holly & Ivy designs with which anybody who has ever visited a National Trust shop will be familiar.
To me these designs are neither one thing nor the other. They are a bit too formal, and for that matter a bit too expensive, to use every day. But for that special occasion they lack the class of the likes of Wedgwood or Royal Doulton.
And yet they clearly have their fans, and judging from the enthusiasm of the Koreans, it is a club that extends around the world. Portmeirion is, I gather, a common item on wedding lists and is collected over the years by aficionados. As such, a bit like Swarovski about which I wrote some months back, buying Portmeirion china is as much as a hobby as anything else.
The summer before last I visited Portmeirion in North Wales. This is the model seaside village designed by Welsh architect Clough Williams-Ellis. He was a forerunner of Prince Charles in his belief that the urban landscape could be both beautiful as well as functional.
With its toy-town colours and strange mix of architectural styles Portmeirion felt to me more like a theme park than a place to live. And although it is possible to stay in one of the properties or the hotel, a theme park or at least a tourist attraction is what it has become, complete with people traipsing around taking photographs and of course the inevitable souvenir shops selling – you’ve guessed it – the Portmeirion range. I am not sure that I liked Portmeirion much, although I am sure it was very novel back in the 1920s when Clough bought the site.
Anyway Clough’s daughter Susan, who died last November, was the founder of the Portmeirion Group. With her husband Euan Cooper-Willis she bought two small pottery businesses in Stoke, and set about commercialising her designs the most famous of which, Botanic Garden, was discovered by chance when she was looking through an antique book of botanical prints.
The new Portmeirion
Last year Portmeirion celebrated the thirty-fifth anniversary of this design. It is still going strong and has been the base upon which Laurence Bryan, the American who has been chief executive since 2001, has built a business which is now showing impressive growth.
The figures are very tempting. Apart from that strong sales growth, which has apparently continued into this year, Portmeirion boasts a strong balance sheet, made 30p of earnings per share in 2007, and after years of paying an unchanged 13.25p dividend has begun to increase this. So it may be time for me to overcome my aesthetic indifference to Portmeirion’s products and look instead at the quality of the numbers. After all I am interested in buying the shares – not a pretty teapot.
This article is taken from Tom Bulford’s free daily email, ‘Penny Sleuth’.