Floorcoverings distributor Headlam Group has reported a decline in sales and profit as reduced demand impacts performance.
According to its full year results for the year ended 31 December 2023, total sales fell slightly by 1.1% to £656.5m from £663.6m in 2022.
EBITDA resulted at £36.7m, down 36.6% from £57.9m, while pre-tax profit reduced 70.4% to £11m from £37.1m.
Headlam said that the UK performance was flat despite a challenging market backdrop, as growth in revenue from Larger Customers (+26%) and Trade Counters (+8.5%) offset decline in Regional Distribution; Continental Europe revenue down 7.7%.
UK volume declined 5%, in line with the market, reflecting reduction in residential property transactions (which declined 20% in 2023) and cost of living crisis reducing consumer spending on home improvements.
“Year-on-year decline in profit principally driven by the macro and industry headwinds, including: £11 million profit impact from lower volume, £10 million from operating cost inflation, £5 million unwind of manufacturer-led price benefit in the prior year and £4 million profit reduction from strategic investments; partially mitigated by £10.3 million of efficiencies and cost savings,” the group added.
During the period, Headlam opened 12 new trade counters and a further 11 refurbished or relocated, while also experiencing a 2.7% revenue growth in Own Product Brands in the UK, supported by successful launch of Everyroom brand during the previous year.
Furthermore, Headlam launched its new website during the period, with digital channels now accounting for 38% of revenue.
In current trading, the group added: “The market weakness observed at the end of 2023 has continued into the first few weeks of 2024.
“We have seen negative volumes across our UK and Continental European businesses, despite continued growth in Larger Customers and Trade Counters. Group revenue in February 2024 was 6% lower than 2023, albeit ahead of January 2024.”
Chris Payne, Chief Executive, said: “2023 has been a challenging year for the flooring industry, with reduced demand in the residential market and high operating cost inflation, which looks set to continue in 2024.
“However, I am pleased with the action taken across the Group to partially mitigate the impact and to deliver higher operating cash flow. We continued to invest to broaden the base of the business, providing a foundation for significant profit uplift in the coming years as the market improves.”
