Headlam Group PLC Trading Update (4062W)
December 12 2023 - 1:00AM
UK Regulatory
TIDMHEAD
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 GBP8.6m, 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
Adam Phillips, Chief Financial
Officer
Panmure Gordon (UK) Limited (Corporate Tel: 020 7886 2500
Broker)
Tom Scrivens / Atholl Tweedie
Peel Hunt LLP (Corporate Broker) Tel: 020 7418 8900
George Sellar / John Welch
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END
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