Floorcoverings distributor Headlam Group plc has reported a decline in sales as losses amounted to over £30m.
According to its full year results for the year ended 31 December 2024, total group sales declined 9.7% to £593.1m from £656.5m in 2023.
In the UK, revenue declined by 8.9% to £525.7m from £577.3m and the Group maintained market share overall. “Revenue continued to grow in our key strategic growth initiatives of Trade Counters and Larger Customers, but this was more than offset by the decline in Regional Distribution. Continental Europe revenue declined by 14.9% (£67.4m from £79.2m),” Headlam said.
EBITDA stood at a negative figure of £5.4m, down from a positive £36.7m, while underlying pre-tax losses resulted at £34.3m, significantly down from its profit of £11m against the previous year.
Headlam said that it was impacted by market decline and cost inflation, with a second consecutive year without price inflation in the core distribution market.
During the period, Headlam announced an acceleration of its existing strategy through a plan to transform the business by simplifying its customer offer, network and operations.
“We have upgraded the targeted benefits: upon completion of the transformation plan we are targeting profit improvement of £25m (from an original £15m+) and a cumulative one-off cash inflow of at least £90m (previously £70m+) from property disposals and working capital optimisation, with one-off cash costs of £30m (previously £25m).
“The Group has made good progress to date, with £57m of cash benefit already achieved in H2 2024, and key transformation milestones achieved.”
These include a simplified offer, the consolidation of 32 trading businesses into one single, national business trading as Mercado, the implementation of a dedicated sales teams with specialist expertise for each of the residential and commercial sectors of the market and the opening of a new distribution centre in Rayleigh (Essex) and a new cross-dock facility in Ipswich – while Enfield and Ipswich sites have been closed.
Furthermore, Headlam has consolidated two distribution centres into one in Scotland as well as implementing a comprehensive assessment programme to identify and capitalise on untapped opportunities for margin expansion and capital efficiency.
As for current trading, the Group’s revenue for January and February 2025 declined 6% compared to the previous year.
Commenting, Chris Payne, Chief Executive, said: “In the face of ongoing market weakness, 2024 has seen Headlam accelerate a major strategic restructuring of the Group. At its heart, this transformation plan will simplify our customer offer, simplify our network and simplify our operations, positioning the Group to increase market share, structurally improve profitability and reduce the capital intensity of the business. We have made strong early progress on our plan and, today, upgrade the expected financial benefits from it.
“Flooring is a discretionary ‘big ticket’ purchase and has been one of the weakest performing categories for consumer spending and the impact of the challenging trading conditions is evident in the Group’s performance for 2024. Nevertheless the Board is encouraged by the significant amount of strategic progress that has already been driven against our plans and we remain focussed on delivering further momentum to ensure the business is positioned for market recovery and long-term success.”
