Headlam warns of weak residential sector despite revenue rise

Floorcoverings distributor Headlam reported a robust revenue performance in the first four months of the year on Thursday, amid ongoing market share gains.

The London-listed firm, which was holding its annual general meeting, said that despite facing challenges such as a decline in residential sector market volumes, primarily driven by the current economic environment and weak consumer confidence, it managed to achieve revenue growth of 3.4% year-on-year.

During the first four months, Headlam said it experienced a limited impact from manufacturer-led price increases, which were prevalent in 2022.

“Notwithstanding the overall positive year on year revenue performance, the lower residential volumes coupled with the moderation in price increases has reduced gross margin in the first four months of the year,” the Headlam board said in its statement.

“However, the company is deploying several mitigating actions.”

Headlam said those included undertaking further cost control, reviewing prices - in particular where prices were previously held despite the inflationary environment - and launching or relaunching products under its own product brands strategy ahead of the busier second half.

“Many of these actions have already been successfully implemented and are starting to contribute to overall business performance, albeit the benefits are mostly second half weighted and overall profit performance remains dependent on consumer sentiment in the residential market.”

At 1244 BST, shares in Headlam Group were down 8.48% at 240.7p.

Reporting by Josh White for Sharecast.com.