Headlam Group PLC (LSE:HEAD) shares dropped nearly 9% on Thursday morning as the company revealed that lower residential volumes due to the current economic environment and weak consumer confidence and reduced price increases have impacted its gross margin.
In a trading update released ahead of its Annual General Meeting, the UK's leading floorcoverings distributor said that despite the decline in residential sector market volumes, the company still achieved a 3.4% increase in revenue in the first four months of the year compared to the same period in 2022.
The company noted that the commercial sector performed well and remains buoyant leading up to the busy summer trading period and it continued to make market share gains.
To mitigate the challenges, Headlam said it is implementing cost control measures, reviewing prices and launching/relaunching products under its own brand strategy. The company expects these actions to contribute to overall business performance, although it said its profit performance remains dependent on consumer sentiment in the residential market.
Around 9.30am, Headlam shares were down 8.8% at 240p.