Company Profile - Sambro

Sambro from value to value +++

Publisher John Baulch visits Sambro’s Bury headquarters to speak to CEO Paul Blackaby about the company’s quiet (r)evolution.

It had been a few years since I last visited Sambro’s UK office - the large, imposing building in Bury it has called home for many years. My trip saw me meet with CEO Paul Blackaby, the man at the helm who has been quietly transforming the company from its pure value roots into a company that still offers great value across all of its product ranges, although now combined with far more exclusive product development and an ambitious environmental strategy.

Paul has been at Sambro for just over three and a half years, having previously worked in the chemical industry: “I’m an accountant by background, and have spent most of my career in the manufacturing sector, running companies and helping to turn them around. But I must say, I have fallen in love with the toy industry.”

110 people work from the Bury headquarters, which is the hub of the company – according to Paul: “The business is all about people and product. Co-operation is key. We don’t own factories, ships or trucks – we rely on many different partners, and it’s a massive effort to co-ordinate them all.” However, like many other British-based

operations, Brexit had a profound impact on the business, leading to some operations moving to an EU location. The company now operates a 3PL facility in Rotterdam and an office in Amsterdam, with Paul admitting: “In the past, all of the stock for mainland Europe came through the UK. Now it goes through Rotterdam. We’re big in Benelux, as well as the UK & Ireland of course – but we are very much focused on expanding our sales across the whole of Europe. Ideally we’d like to sell directly to major retailers, although we are very much open to distribution partnerships in certain territories.”

Licensing has always been a key element for Sambro, although the business has become far more focused on properties from key partners in recent years, as Paul details: “First and foremost, we focus on our ‘big 4’ licensing partners – Paramount, Mattel, Hasbro and Disney. Then we look to build out a broader portfolio through partnerships with key licensors which have properties that align with our product ranges and our retail customers. We are happy to take calculated risks on successful new and emerging properties, as well as some brands which have proved that they have staying power, such as Acamar’s Bing.”

In terms of the product ranges, Paul describes Sambro’s ethos as “unashamedly value driven. Our core strength lies in the value retail and grocery channels, although we look to supply retailers across the spectrum. We are constantly being challenged by our retail partners to bring something interesting and different to them. If we can deliver great product at great value, they’ll buy from us.” One of the key changes which Paul has made to the business is to put greater emphasis on design and product development – that team is now the largest within the overall business. Headed up by John Mallet, who spent many years at Disney prior to joining Sambro, the design team works in tandem with the leadership team, which also includes Clare Rix and Ed Whieldon, to develop successful new ranges.

I visited Sambro in the middle of what Paul describes as “our best year ever, even when compared to the peak years when Frozen boosted the business from 2016 onwards.”

The company’s financial results for 2022 have just been released: group sales in 2022 were £61.4m, an increase of 20.4% over the 2021 figure of £51.0m. Gross margins also increased from 20.0% in 2021 to 24.7%, driven by significant internal efficiency improvements.

Of course, as a business heavily predicated on licences, turnover can tend to ebb and flow according to the life cycle of the properties Sambro is working with. But one of the ways in which this unpredictability can be mitigated is to blend the licences with a greater degree of own-IP development, as Paul explains: “We do have some own brands, even though 80% of our product range is licensed. However, half of our licensed range is based on our own-IP product development, adding a licence. That’s the direction we have been trying to steer the business in – the key is to come up with great ideas of your own that can be enhanced by a licence, which gives us an important point of difference to our competition.”

Nevertheless, it hasn’t been an entirely straightforward journey to get to this point; just prior to the Covid pandemic, the bank was keen for Sambro’s investment backer to put more money into the business. Then the pandemic struck, although in many ways that actually helped Sambro, as Paul admitted. “It gave us the time and space to sort things out which needed to be sorted,” he explains. “We had too much stock, too many licences and too many people. We needed to refocus the business and put some fundamentals in place.”

The company set about reorganizing the way it worked, and the new approach paid dividends. Investor Elysian is still very much involved, owning two-thirds of the business. Paul is pleased with the relationship: “We’ve worked well with private equity for many years. Elysian is very patient and hands-off, allowing us to get on with the task of running the business unhindered.”

Indeed, as Sambro refines its product offering and the way it conducts business, Paul believes the company is “transitioning towards the more legitimate toy company that the investor thought they had bought in the first place.”

A key element in that transition is the company’s strong environmental message: Paul believes that in this day and age, “from a private equity perspective, every company needs to have an ESG story,” ESG referring to environmental, social and corporate governance. Sambro has invested considerable time and resources in recent years to develop its environmental strategy, and the hard work has paid off. Paul states that: “We have made real progress. It’s something we all feel passionate about. We try to do our bit in literally everything we do. We constantly ask ourselves ‘are we doing the best we can from an environmental perspective, both in terms of product and packaging’. As we operate predominantly in the value arena, we have to be mindful of certain limitations, but we are fully committed to continuing to improve in this area – plus it really differentiates us from our competitors.”

Many would assume that being focused on the value channel has given Sambro the perfect opportunity to grow in recent years, with the perception that value retailers were ideally placed to benefit from the global cost-of-living challenges, However, it isn’t quite as straightforward as that, as Paul outlines: “you have to remember that it is the kind of consumer that shops in value stores that is really being squeezed at the moment. We’ve got to produce the best product we can at the best value we can. We have to respond to the prevailing economic headwinds by making sure our product is on shelves at the right price. We want customers to buy our product and think ‘wow, we got a great product there for a great price.’ It’s not just the UK that has been affected: right across Europe, many people are spending less. Our task is to make sure it is our products that are in their baskets.”

You will see that ethos continuing in 2024, when Sambro has some key new developments to unveil, including a completely revamped outdoor range for Spring Summer. The selection will feature a new range of inflatables, plus many other popular outdoor lines such as bubbles and goggles. Look out for new licences too, including Barbie and Hot Wheels, together with tier-one properties from Paramount and Disney. The packaging of the outdoor range has also been completely redesigned: out go plastic bags, to be replaced by board boxes. The new designs will not only make for a much stronger on-shelf presentation, but they will also be better for the environment.

Another major introduction for Spring Summer comes in the form of a new Stationery range, featuring a selection of hot properties such as Disney’s Stitch, Wish, Spidey and Friends and Minnie Mouse, plus Paramount’s Paw Patrol and Teenage Mutant Ninja Turtles.

Looking ahead to autumn winter ’24, Sambro is looking to unveil a major new plush range with a host of new licences – although these were all still under wraps when I visited. In addition to the new licensed ranges, Sambro’s new product development team has also been hard at work on its own-brand lines. Highlights for 2024 include the Love and Hugs brand which encompasses cosmetics, jewellery and arts & crafts; Puzzle Palz, a range of stylized collectible erasers and Bops n Tops, another stylized collectible range, this time featuring pencil toppers. The range is constantly being refined and improved, but Paul is adamant this has to be done in the right way: “These days, we focus on less, but all of the products we launch reflect our DNA – and we feel that gives us the edge.”

Visitors to London Toy Fair and Spielwarenmesse in Nuremberg will be able to see the full Sambro 2024 line-up, while the team is also happy to welcome retail buyers to Bury to view all of the ranges in its expansive showroom.