This is an article following Gus 1065's lead to try to get some specific company discussion going .

Headlam is a UK focused floor covering company that has been built up over the last 20 years by multiple acquisitions of small, regional carpet & flooring companies to create a national player in a £3bn pa market (at distributor level pricing), where it claims to have x6 the sales of its nearest competitor with (my calculation a +/- 20% share.

Using its scale, its acts as an intermediary between global floor cover manufacturers and especially the traditionally small, independent carpet/floor fitters who often want to buy room size pieces. The former outsource the complex distribution of bulky carpet, the latter have no need to hold inventory which needs to be very wide and buy pre-cut as needed. Ave/piece order is only about £150.

Historically, (at least 2010 onwards) it was very conservative. All goodwill at acquisition was written off; acquired companies kept their own name and sales force; annual reports gave real detail about how costs built up and operational decisions made eg bought X vans and cash generation was used to keep debt very low before being paid out in quite generous dividends – around 25p/share or 4+% yield in 2016-19. Share price reflected this being very unspectacular and tightly held.

Even prior to Covid it had started to be shaken up a bit as with its national footprint largely done, it moved from buying cheap, distressed Mom’n’Pops to higher quality firms that strategically widened its sphere of operations ie beyond carpets. (Unfortunately, its biggest example was Domus, a specialist floor covering company for bigger projects in London in 2018). It also had long held plans to create a massive new freehold owned distribution centre in Ipswich finally underway to consolidate depots in SE.

A focus on cost control meant it entered Covid with key projects like updating its distribution network and more focus on digital. (Frankly, it was conservative to the point of being a bit behind the time!)

Covid hit it quite hard (April 20) but very briefly since everyone being home engendered a residential boom as soon as tradespeople were able to move about again. Residential is roughly 2/3 of sales with commercial 1/3. By H1 2021, overall Sales are now about back to 2019 levels (Residential +4%, Commercial -12%).

Management also changed in 2019…

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