Half Year 2024 Headlam Group PLC Earnings Call Transcript
Key Points
- Headlam Group PLC (LSE:HEAD) has continued to grow revenue in strategic areas, with larger customers and trade counters seeing increases of 2.3% and 7.4%, respectively.
- The company has launched new value ranges and increased the proportion of revenue from its own product brands, reflecting strong performance from the 'every room' brand.
- Headlam Group PLC has successfully optimized its logistical footprint, including the conversion of operations in Manchester into a cross-dock facility and the sale of the Stockport distribution center.
- The company has opened nine new trade counter sites and refurbished 11, expanding its network to 76 locations and opening 1,600 new customer accounts.
- Headlam Group PLC has a strong balance sheet with significant liquidity headroom, including cash and undrawn facilities of GBP72 million and a property portfolio valued at GBP142 million.
- The flooring market has been in decline for three consecutive years, with a 10% to 15% decrease in the first half of 2024, contributing to a cumulative decline of at least 25% since 2019.
- UK revenue declined by 11.3% and Continental Europe saw a 15.9% decline, reflecting weak market conditions.
- The company reported an underlying loss before tax of GBP16.4 million, a reduction of GBP22.4 million year-on-year.
- Gross margin decreased by 86 basis points to 30.6%, primarily due to heightened clearance activity.
- Operating costs increased by 6.2%, driven by cost inflation and strategic investments, including a 10% increase in the national minimum wage in the UK.
Hi there, welcome to Headlam's half year presentation for 2024. I am Chris Payne, the Chief Executive, and I'm joined here by Adam Phillips, the Group CFO. So by way of introduction, this is a slightly different presentation format from that we've used in the past, given our recent press releases around an acceleration of our strategy and the transformation plan.
I thought we could go for a slightly different format where Adam is going to take us through the first half performance and an outlook on market conditions. And I'm going to cover in more detail and update on our strategy and the two year transformation plan. So I'll hand over to Adam to get us started.
Thanks, Chris. I'll start with an update on the market before stepping through the results for the first half. So on this slide, we've set out a few of the indicators for the flooring and home improvement markets. And on the left-hand side there, firstly, consumer confidence,
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