Floor coverings distributor Headlam has reported a decline in sales as half year revenues fell below £300m.
According to its latest trading update for the six months to the ended 30 June 2024, total sales were down 11.8% to £292.5m from £331.8m in 2023.
EBITDA resulted at a loss of £2.2m compared to a profit of £18m, with pre-tax losses amounting to £20.6m, down from a profit of £4.5m.
Headlam said that UK sales were down 11.3% to £256.4m and Continental Europe revenues were also down 15.9% to £36.1m.
“Competition in this part of the market also remains particularly concentrated, with distributors reducing prices to maximise share in a declining market,” the group said. “Whilst we have implemented some price and promotional activity during the Period, this has been selective and targeted, rather than widespread.
“Towards the end of the Period we introduced new value ranges and these have been well received in the market, with strong customer demand. Stock clearance has been a feature of this market this year and we also accelerated clearance of certain ranges towards the end of the Period.”
Looking ahead, over the next six months, Headlam will be undertaking further optimisation activity including opening a new distribution centre in Rayleigh (Essex) and a new cross-dock facility in Ipswich to enable it to better serve its customers in the South East of England.
As a consequence of this, the Ipswich distribution centre will become a surplus property and will be sold. The group is also consolidating its two distribution centres in Scotland, resulting in its Uddingston site becoming a surplus property.
Group revenue for July and August declined 8.4% compared to 11.8% decline for the first six months, supported by four consecutive months of reduced revenue decline in Regional Distribution.
Commenting, Chris Payne, Chief Executive, said: “The challenges impacting the flooring market have been well documented and are fully reflected in Headlam’s performance in H1 2024. Nevertheless, the Group has made good strategic progress and whilst these highlights are masked by external headwinds, it is particularly pleasing to see growth across the Group’s Larger Customers and Trade Counters.
“As the clear UK market leader, drawing on a heritage of over 30 years, a large and diverse customer base, and long-established supplier relationships, Headlam has a unique long-term opportunity. Whilst we cannot control the macro-economic environment, we can continue to adapt and evolve the business to take full benefit of the market recovery. I’m therefore pleased to announce today an acceleration of our strategy with a 2-year transformation plan to make Headlam a more effective organisation by simplifying our offer to customers and how we operate. As we unlock cash and costs from our business, we will further invest in the proposition across all our customer groups in order to grow market share and strengthen our position as the UK’s leading floor coverings distributor.
“Looking ahead, the lead indicators for consumer spending on home improvements are more positive, albeit the timing of recovery remains uncertain and is likely to be later than previously anticipated. However, with our new transformation plan underway, our teams are laser focussed on realising the benefits which will start to take effect in 2025, positioning the Group to emerge strongly when market conditions improve. We remain confident in the long-term outlook for the Group and look forward to announcing further progress against our plans in due course.”
