Headlam Group PLC (LON:HEAD) saw its shares slide in mid-morning trading Wednesday after a drop in first-half sales led to the group reducing its expectations for the full year.
The company, which connects flooring producers with retailers and contractors, reported in its interim results an underlying pre-tax profit of £17.7mln for the period, up just 0.9% on the same period last year, while revenues rose 1% to £337.5mln.
Soft UK market to persist
Like-for-like (LFL) revenues for the UK, however, shrank 5.2%, a reversal of the 2.1% growth in the first half of 2017, while LFL growth in continental Europe slowed to 1.7% from 3% previously.
However, the firm also reported an improvement in its gross margins of 113 basis points to 32.53% and also maintained its interim dividend at 7.55p per share.
In its outlook, the group said that the softness in its UK market continued to persist and that the situation was likely to continue into the second half of the financial year, impacting its core residential business.
As a result, the firm said it now expected its full year outcome to be “towards the lower end of current market expectations”.
Headlam added that it would also be introducing price increases from 1 September, ranging from 2% to 10%, to reflect supplier increases as a consequence of raw material price inflation.
The firm’s news follows difficulties for fellow flooring sector retailer Carpetright PLC (LON:CPR), who has embarked on a turnaround plan which involves the closure of 92 of its worst-performing stores.
Headlam shares were down 3.2% at 435p.