Investor pressure mounts on boss of King’s favourite interior designer

A former National Lottery boss is under growing pressure to quit as chair of King Charles’s preferred interior design outlet over opposition to the group’s “lavish” relocation and “poor performance”.

Dame Dianne Thompson is facing calls to resign from her role at Sanderson Design Group as part of a campaign against the wallpaper company’s drift towards “inaction and inertia”. 

The design group’s history dates back more than a century and its Royal Warrant means the company’s fabrics and wall coverings adorn the official residences of the royal family. In February, the group launched a collection inspired by King Charles’s Highgrove Estate.

LBV Asset Management, which owns about 14 per cent of Sanderson, is pushing for Thompson to be removed as a director and chair. 

“This is by no means an indictment on Dame Thompson’s career or character, both of which are incredibly distinguished,” the investor told Sanderson last month.

“It is an indictment on the current state of the company, which requires leadership – and a chairman – with the mandate and sufficient tenure ahead of him or her to lead a sustained period of change.”

A number of shareholders in the Aim-listed firm, which is due to publish its half-year results on Monday, told City AM that they support LBV’s proposals, voicing a number of concerns over the group’s strategy. 

Paul Hawkins, an asset manager who holds a personal stake in the company, said that Sanderson’s “only excuse for poor performance always seems to come back to difficult economic conditions”. 

“That’s simply not good enough, especially when your biggest competitor in Colefax is performing well,” he added. 

Ex-lottery boss under pressure

Shareholders said that licensing revenue, which grew by a third to £9m in the year to January, is masking the firm’s wider underperformance. 

Hawkins said: “It makes no sense to me why Dame Diane Thompson wouldn’t bow out gracefully and accept it’s time to pass the baton onto someone new with fresh ideas and challenge to a management team that clearly needs it.”

Sanderson is in the midst of a turnaround under chief executive Lisa Montague. The firm posted a £3m pre-tax profit in the year to January, up from a £14m loss the previous year.

But LBV has criticised the board’s decision to approve Montague’s £729,000 pay packet for this year. Her total pay deal, combined with that of Sanderson’s finance chief, accounted to 36 per cent of the group’s profit.

“They are being paid extremely well to repair the profitability that has fallen so considerably under their watch. The Chair doesn’t appear to have a credible answer as to why this is justified,” Hawkins said.

Shareholders expressed concern over Sanderson’s recent relocation to Voysey House, a Grade II-listed building in Chiswick, west London.

One shareholder who is close to the firm’s senior management told City AM that the move to the site of the interior designer’s former factory was a “vanity project” and a “poor use of shareholder funds”.

They said: “Everyone in the industry is at Chelsea Harbour, but Sanderson, at a time of extremely poor performance, decided to relocate to Voysey House.” Another shareholder criticised the “expensive” relocation.

Rhys Summerton, the founder of Milkwood Capital, told City AM that the upgrades to Voysey House ahead of the company’s move were “lavishly done,” though he said it makes sense for the firm to be at its “historical home”. 

A spokesperson for Sanderson said: “Voysey House has been Sanderson Design Group’s spiritual home for more than 100 years. 

“It is central to unlocking the commercial value of our 75,000-piece archive, bringing together our design teams and providing a hub for global customer engagement and partnerships.”

Sanderson ‘neglected by shareholders’

Shareholders said Sanderson has been slow to expand in the US market, where Aim-listed competitor Colefax has toasted an “exceptionally strong sales performance”.

“In my view the business and its leadership need to have much greater focus on their core UK market. They have a wide distribution that they are directly in control of,” the person close to Sanderson’s management said.

“Whilst overseas markets, particularly the US, and licensing are important, they alone will not resolve Sanderson’s problems.”

Summerton said Milkwood has backed LBV’s proposals because Sanderson needs more oversight. “The governance that you see at Sanderson is very similar to the governance that you see at a lot of other smaller companies,” Summerton said.

“Shareholders neglect the company and the decision-making sometimes and the scrutiny of the executives, and that results in underperformance.”

A person close to LBV said that the investor has never taken such direct action with a company before. “They are not an aggressive player in that way but this time they feel they had no choice.”

Sanderson’s history dates back to 1860, when Athur Sanderson & Sons was founded in Islington. In 1940, the designer bought Morris & Co, the brand founded by Arts and Crafts pioneer William Morris. 

The company’s spokesperson added: “The Board firmly believes neither of LBV’s proposed resolutions are in the best interests of the Company and its shareholders. 

“Immediate removal of the Chair would risk unnecessary disruption at a time when the Group’s strategy is delivering measurable progress and profitability, and the Board does not consider that LBV has demonstrated how its nominee’s appointment would strengthen the Company.

“Our focus remains on delivering sustained profitable growth and shareholder value. We will set out our full response to both resolutions in the forthcoming shareholder circular.”