REG - Headlam Group PLC - Trading Update

HeadlamAnnouncement

12/12/2023 07:00

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RNS Number : 4062W  Headlam Group PLC  12 December 2023

12 December 2023

Headlam Group plc

('Headlam' or the 'Group')

 

Trading Update

Robust performance in challenging market conditions

 

Headlam Group plc (LSE: HEAD), the UK's leading floorcoverings distributor,
is providing a trading update in respect of the eleven months of the year to
30 November 2023 (the 'Period').

 

Overall, the Group expects full year 2023 results to be broadly in line with
expectations, based on the trading patterns observed to date. After a
relatively robust summer trading period, the market in September and October
was weaker than expected, reflecting the impact of the cost-of-living crisis
on residential RMI* as consumers cut back spending on home improvement
projects. However, the Group's November trading was improved, with a step up
in average daily sales compared to October, albeit volumes and revenue
remained below the previous year and typical seasonal uplifts.

 

In the UK the revenue for the Period is slightly positive year-on-year, offset
by revenue decline in Continental Europe, resulting in Group revenue being
flat year-on-year for the first eleven months. In the UK, the Group saw a 5%
volume decline year on year, although this is in line with the overall market
according to data** for the 12 months to October 2023. Despite the general
market backdrop, revenue from Larger Customers and Trade Counters has remained
strong, with year-to-date growth of 27% and 9% respectively; November itself
was a record month for revenue from Larger Customers.

 

Gross margin and costs remain well controlled and good progress has been made
in the mitigating actions set out in our half year results announcement,
including the successful implementation of dynamic route planning which brings
efficiencies in transport costs. Operating cost inflation in H2 remains
elevated, as seen in H1, but is expected to moderate next year.

 

Building on the strong operating cash generation in H1, the Group has
subsequently agreed a settlement with insurers for the Kidderminster building,
which was destroyed by a fire in 2021. This has resulted in cash proceeds of
£8.6m, already received. Stock levels continue to be well controlled and will
show a reduction over the year.

 

As previously reported, volume of sales in the UK market are around 20%
lower** than in 2019 on a rolling 12-month basis. Whilst there is uncertainty
over the short-term outlook for the market, we remain optimistic about the
medium-term prospects for both the market and our opportunities to grow market
share. The Group's strong cash generation, along with the positive medium-term
prospects, enables us to continue to invest in broadening market presence and
building capabilities, to position the business well as the market improves
and volumes recover.

 

* RMI = repair, maintenance and improvement

** Source: commissioned specialist research from MTW Research

 

Enquiries:

 Headlam Group plc                                Tel: 01675 433 000
 Chris Payne, Chief Executive                     Email: headlamgroup@headlam.com (mailto:headlamgroup@headlam.com)
 Adam Phillips, Chief Financial Officer
 Panmure Gordon (UK) Limited (Corporate Broker)   Tel: 020 7886 2500
 Tom Scrivens / Atholl Tweedie

 Peel Hunt LLP (Corporate Broker)                 Tel: 020 7418 8900
 George Sellar / John Welch

 

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