HEADLAM, which describes itself as Europe’s leading floorcoverings distributor, says Q1 2022 revenue was broadly in line with its plan, followed by a slightly weaker performance in April 2022 owing to overall softening in the residential sector and some delayed orders.
In the four months, residential sector revenue for the group was down 0.5% against the prior year period on a like-for-like basis. However, the company says its branded, higher-end and higher-margin products performed above plan, and adds that delayed orders are now coming through.
It reports: ‘The commercial sector continued to show recovery from its severely impacted position in 2020 and 2021 owing in large part to Covid-19-related restrictions. In the four months, commercial sector revenue for the group was up 5.8% against the prior year period on a like-for-like basis.
‘The overall revenue performance in the period was in-line with 2021. Profit performance was above 2021 owing to strong margins continuing into 2022, supported by the company’s ongoing focus on operational efficiency through cost control.’
Strategic progress
The company’s strategy is focused on driving additional revenue opportunities from a more efficient operating base, including capturing market share in underweight customer segments. Says Headlam: ‘Encouraging progress was made in the period, including further new customer gains and increase in SKUs in the multiple retailer segment; 25% of sales now coming from the new and improved digital channels (2019: 11%); and the revenue performance of the trade counter network which is subject to improvement and significant roll-out being up 13% for invested sites on the same period last year (on a like for like basis).’
Additionally, activity was reportedly focused on preparations for new product launches over the coming months to support market share gain.
Outlook
As expressed at the time of the final results announcement, the continuing inflationary environment is likely to impact consumer spending during the year, thereby suppressing underlying volumes and revenues in the industry. However, the company’s strategy, set out above, should provide a countermeasure and some protection against the weaker underlying market. Additionally, the continuing manufacturer-led price increases owing to cost inflation will continue to provide a support to revenue performance and help offset operational cost inflation.
Summer is an important period for the commercial sector activity owing to refurbishment, repair, and maintenance particularly in educational and other establishments. With a severely impacted industry-wide commercial sector performance in the previous two years, there’s an expectation that some of the work previously not undertaken will take place this year.
Given the above, and the performance to date, the company continues to be comfortable with profit expectations for the year.
Outside of trading
Patrick Butcher, formerly group CFO at Capita, The Go-Ahead Group and Network Rail, has joined the company as interim chief financial officer on a temporary basis while the current independent search process for a permanent chief financial officer is ongoing.
The board currently anticipate being able to provide an update on the search prior to or at the company’s next scheduled pre-close trading update on 28 July 2022. The board would also like to take the opportunity to again express its deepest thanks to Philip Lawrence who’s stepping down as non-executive chairman at today’s AGM after seven years on the board.
Commenting, Chris Payne, ceo, said: ‘With our comprehensive growth focused strategy, which is demonstrating progress, we believe we’re well-positioned despite the expected weakening in the residential sector of the marketplace. We look forward to the busier trading months ahead and the ongoing delivery of our strategy.’
Keith Edelman, non-executive chairman (designate, subject to the annual director re-election shareholder vote at today’s AGM), commented: ‘I’d like to put on record the thanks of the board for Philip’s contribution. Philip has been instrumental in developing a far stronger board for Headlam, and under his chairmanship the company has developed and is now delivering on its strategy. We wish him well for the future.’
www.headlam.com
