Headlam recorded its highest level of sales ever last year by snatching market share from rivals as consumers switched to cheaper independent retailers to purchase flooring. As a result, the company has not only defied the tough trading environment by lifting like-for-like sales in the UK by an impressive 7.7 per cent, but has done so at a time when larger rival Carpetright has been issuing multiple profit warnings.
The company has also been benefiting from the shift away from its traditional distribution business, which is in long-term decline, and towards the specialist commercial and residential markets, both of which returned double-digit sales growth in 2011. These two segments accounted for 63 per cent of UK revenues. Other positive market trends included a 3 per cent increase in the number of active customer accounts and a slight fall in debtor days. Keeping a tight rein on the predominantly independent customer base is important given the greater risk of bad debts arising in what remains a challenging trading environment.
The growth seen in the core UK market was in contrast to the 5 per cent decline in underlying sales in the smaller continental European operation, but, importantly, not at the expense of profits which rose over 10 per cent to £2.83m.
Broker Peel Hunt forecasts 2012 adjusted EPS of 25.6p (24.6p in 2011).
HEADLAM (HEAD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 286p | MARKET VALUE: | £238m | |
| TOUCH: | 285-300p | 12-MONTH HIGH: | 312p | LOW: 230p |
| DIVIDEND YIELD: | 4.9% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 200p* | NET CASH: | £7.6m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 545 | 45.2 | 37.1 | 23.1 |
| 2008 | 557 | 40.1 | 34.5 | 19.7 |
| 2009 | 534 | 22.1 | 19.1 | 11.0 |
| 2010 | 536 | 25.0 | 21.5 | 12.4 |
| 2011 | 570 | 27.6 | 24.6 | 14.1 |
| % change | +6 | +10 | +14 | +14 |
Ex-div: 30 May Payment: 2 Jul *Includes intangible assets of £13.2m, or 16p a share | ||||
