Headlam reports improved trading conditions in second quarter

(Sharecast News) - Headlam said in an update on Tuesday that trading conditions showed signs of improvement in the second quarter, with revenue trends continuing to recover, although the group still expected to report a first-half underlying loss before tax of around £20m. In its pre-close trading update for the six months to the end of June, the UK floor coverings distributor said group revenue declined 3.8% year-on-year.

However, the rate of decline narrowed sharply in recent months, with revenue down just 0.6% in June compared with a 6.6% fall in January.

UK revenue mirrored the group trend, also down 3.8%, while continental Europe fell 3.9%.

Notably, June marked the first month of year-on-year growth in UK revenue and volume since early 2022.

Headlam said it remained confident in meeting full-year expectations, supported by the improving revenue trajectory and further gains identified under its ongoing transformation plan.

The London-listed company said it had now launched fully centralised procurement for stock purchases and is progressing with the closure of its Nottingham distribution centre by the end of August.

It had also engaged Alvarez & Marsal to identify additional margin and efficiency opportunities.

The group previously set a target of £25m in profit improvement by the end of 2027, with benefits beginning to materialise in 2025.

It said it now expected to increase that target, and would provide more detail with its half-year results in September.

Net debt stood at £24m at the end of June.

Headlam had since completed a £22m sale-and-leaseback transaction of its Tamworth distribution centre, with proceeds earmarked to reduce borrowings under its £72m revolving credit facility.

The group said it was continuing to benefit from a robust balance sheet, underpinned by significant property assets valued at £80m.

At 1050 BST, shares in Headlam Group were up 1.05% at 87.71p.

Reporting by Josh White for Sharecast.com.