Headlam Making 'Good Progress' On Transformation Plan

Headlam (LSE: HEAD), the leading floorcoverings distributor, provides a trading update in respect of the first four months of the year ("Period") ahead of its Annual General Meeting later today. 

The Group's year-on-year revenue has sequentially improved through the Period, from a decline of 6.6% in January to a decline of 1.4% in April. Group revenue for the four months overall declined by 4.7%. Revenue from the strategic growth initiatives of Larger Customers and Trade Counters continued to grow, with the latter benefitting from maturity of existing sites as well as the addition of new locations in the Period. Revenue in Regional Distribution declined, albeit also sequentially improving through the Period.

Good progress continues to be made on the transformation plan. Following the successful network optimisation initiatives in the South East of England and in Scotland, we have commenced optimisation in the Midlands, with the closure of our Nottingham distribution centre expected to be completed in Q3, with operations being consolidated into our nearby Coleshill and Tamworth distribution centres. 

There are some encouraging signs of the market conditions improving and we are also seeing early signs of the benefits of the changes we have been making to our sales organisation. In the residential side of the business we have relaunched our Lifestyle brand, including a major rollout of display stands alongside incentives, to support our independent retailer customers. In the commercial market, we have won a number of contracts and projects, which will add to revenue over the coming months. However, as the market is taking longer than expected to improve, we are accelerating and increasing the scale of the transformation plan to grow revenue and reduce costs. We will provide more detail on this in our pre-close trading update in July. 

Notwithstanding the cautiously improving market outlook, due to the weaker than expected market performance year-to-date, we expect the underlying loss before tax for 2025 to be significantly weighted towards H1, with H2 supported by an improving market backdrop and the impact of the transformation plan. Looking beyond 2025, we have confidence these tailwinds, in conjunction with the strength of Headlam's market position and proposition, will underpin a substantial recovery in Headlam's profitability.

The Group's robust balance sheet has continued to be supported by significant headroom on its borrowing facilities, unencumbered stock and receivables, and a property portfolio valued at £94 million. 

Footnotes 

1.   All year-on-year revenue figures are presented on a same working day basis. There has been one less working day in the first four months of 2025 compared to 2024

2.   The property valuation of £94 million is at the market valuation undertaken in January 2023

Source : Headlam Group plc

Image : Headlam Group plc

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