Shares in Supreme (SUP:AIM) gained ground after the fast-moving consumer goods supplier upgraded FY26 sales and earnings guidance.
The Manchester-based group attributed the upgrade to the ‘significant growth’ seen in vape sales in the year to March 2026, as well as the positive impact from acquisitions and new products.
Earnings ‘significantly ahead’
Guided by entrepreneurial founder and CEO Sandy Chadha, FY26 was a record year for the vapes, drinks, batteries and lighting business company.
Supreme now expects revenue and adjusted EBITDA to be ‘significantly ahead’ of consensus estimates.
Analysts were calling for sales in the £245 million ballpark and adjusted EBITDA of £37 million. However, the resilient firm breezed past these forecasts and is now guiding for a 15% increase in sales to £265 million and adjusted EBITDA of about £40.6 million, up a tad on FY25’s £40.5 million.
Vape sales puff higher
Despite the challenges arising from the UK government-mandated ban on disposable vapes, Supreme’s vaping sales grew by more than 10% year-on-year.
The company also called out a strong showing from its Drinks & Wellness category, which includes Typhoo Tea and Clearly Drinks. Here, performance was boosted by an excellent contribution from the recently-acquired SlimFast meal replacement brand.
An ‘awful lot to like’
Shore Capital commended Supreme for the navigation of the ‘immensely challenging evolution of the UK vape regulatory system, whilst keeping focused on the day job in that channel’.
The house broker also noted that Supreme has continued to build and improve its wider assortment, manufacturing base and cash generation. Shore Capital said there is ‘an awful lot to like from a firm whose equity we see as structurally undervalued’.
We share management’s confidence in Supreme’s future trading prospects.
While there is pressure on the consumer, Supreme distributes products to a diverse customer base. This includes value-oriented retailers like Tesco (TSCO), B&M (BME), Iceland and Aldi as well as Amazon (AMZN) and HM Prison & Probation Service.
Supreme is growing organically, with vape sales in positive territory despite the uncertainty facing the UK market.
Moreover, the firm has the balance sheet strength to execute on a robust pipeline of potential acquisitions that would further diversify the business by product category.
The shares look good value on a single digit price-to-earnings ratio and there is scope for further upgrades thanks to the operational gearing in the business.
Read the press release here: https://investors.supreme.co.uk/
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