- Headlam Group
- 25 March 2026 10:06:44
Source: Sharecast
The London-listed floorcoverings distributor posted revenue of £498.7m, down 4.6% year-on-year from £525.7m, reflecting a weaker market backdrop.
Its underlying loss before tax widened to £39.5m from £31.7m, while underlying operating loss increased to £33.4m from £24.9m.
On a statutory basis, operating losses doubled to £63.5m and losses before tax rose to £69.6m, with basic losses per share increasing to 102.0p from 31.2p.
Headlam reported negative underlying operating cash flow of £18.6m, compared with an inflow of £27.0m in 2024, while net debt stood at £31.4m at the year end, compared with net cash of £10.9m a year earlier.
EBITDA losses widened to £12.5m from £5.0m.
The group did not declare a dividend.
Headlam said trading was impacted by declining consumer spending on home improvements, alongside cost inflation and investment in new trade counter collection points.
Gross margins were broadly stable at 29.5%, as a shift towards lower-margin larger customers was offset by sourcing efficiencies and a centralised buying function.
The company said it had taken steps to strengthen its balance sheet, including agreeing a new three-year £85m asset-based lending facility after the year end, extending financing to 2029.
Inventory levels were reduced by £10.6m year-on-year, while the group continues to progress property disposals, with three transactions expected to complete in the coming months.
The firm also highlighted a UK property portfolio valued at £75m.
Strategically, the group was implementing a multi-year plan focused on core independent retailers and contractors, including reducing low-margin non-core revenue, simplifying product ranges and tightening cost control.
Headlam said it had already reduced its active product range from 27,000 to 16,000 SKUs and was seeing early benefits from service improvements introduced in late 2025.
The transformation was expected to result in a smaller revenue base over 2026 and 2027 but with improved margins and lower operating costs, with the group targeting a return to mid-single-digit operating margins once fully implemented.
Headlam reiterated its expectation of returning to profitability in 2027.
The company also outlined board changes, with Rob Barclay joining as chief executive designate in March and set to join the board in April, while Richard Jones had joined as interim chief financial officer.
Looking ahead, Headlam said trading conditions remained difficult, citing ongoing weakness in consumer demand and cost pressures linked in part to the conflict in the Middle East, which had driven higher prices for polypropylene and fuel.
However, it said it expected net debt to reduce through 2026 as a result of property disposals and improved working capital.
“Our new core customer strategy, combined with the ongoing benefits of our transformation programme, provides a clear road map to profitability in 2027 and beyond,” said interim executive chair Stephen Bird.
“Current cost saving initiatives are progressing as anticipated with milestones being met. Whilst our current trading environment remains challenging, this should provide reassurance to all stakeholders that Headlam is delivering and will be able to capitalise on its position as the preeminent distributor of flooring products in the UK.
“The independent retailers and contractors we serve are resilient.
“The market will recover and when it does, we will be well placed to support them - initially smaller, but stronger, more focused, and more profitable.”
At 0945 GMT, shares in Headlam Group were down 6.7% at 41.8p.
Reporting by Josh White for Sharecast.com.
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