Furnishing fabrics and wallpapers supplier Colefax Group PLC has reported a growth in sales as new showroom boosts Kingcome furniture division.
According to its Preliminary Results for the year ended 30 April 2023, total sales increased by 3% to £104.80m from £101.8m in 2022, but down by 3% on a constant currency basis due to lower Decorating Division sales.
Pre-tax profit decreased by 21% to £8.54m from £10.82m, mainly due to lower Decorating Division profits following an exceptional performance in the prior year.
Fabric Division sales increased by 9.5% to £92.51m from £84.51m and by 1.5% on a constant currency basis. US sales were down by 1%, while UK sales rose by 1% and Europe sales were also up by 7%.
“The UK market at the high end has been reasonably resilient although as in the US rising interest rates are starting to have an adverse impact on housing transactions which are a key driver of sales. Sales in the second half of the year were flat following a 4% increase in the first half of the year,” Colefax said.
Decorating Division sales decreased by 35% to £9.52m from £14.63m and posted a pre-tax loss of £96,000.
Sales of Kingcome furniture, which represent 3% of Product Division sales, increased by 5% to £2.78m from £2.66m, while pre-tax profit increased by £160,000 to £240,000.
“The improved profit partly reflects the absence of one-off marketing costs in the prior year but also demonstrates the high level of operational gearing in this business where relatively small changes in sales can have a significant impact on profits,” the group added.
“During the year we completed a major investment in our freehold factory in Devon which has increased operational and energy efficiency. In September we opened a new trade showroom adjoining our Colefax showroom in Chelsea Harbour and are starting to see the benefits of this investment.”
David Green, Chief Executive of Colefax Group plc, said: “The Group has delivered another strong performance achieving record Fabric Division sales against a record prior year. We benefitted from a strong US Dollar and a continuation of the home decorating boom triggered by the pandemic but have also had to deal with high levels of cost inflation in all areas of the business.
“The performance of the Group lags activity in the high-end housing market and we do expect trading conditions to become progressively more challenging as steep interest rate increases start to have an impact in the US and the UK. These expectations are factored into our current year market forecast.”
