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Headlam sales suffer in weak start to 2018
Headlam's like-for-like sales fell in the first four months of 2018 as the carpet and flooring distributor suffered from a weak UK market, reduced orders from its biggest customer and bad weather.
The company said it was relying on a pickup in trading in the second half of the year to meet market expectations for annual profit. Its shares fell 3.5% to 465.5p at 12:47 BST.
Revenue rose 0.6% in the four months to the end of April from a year earlier but revenue from businesses established for a year or more at constant currency fell 5.4%, Headlam said in a trading update. Like-for-like sales dropped 6.3% in the UK and edged up 0.2% in continental Europe.
Lower orders from Headlam's biggest customer, which it did not identify, made up 37% of the decline in UK like-for-like revenue. Profitability from that customer was broadly flat due to higher margin products and cost reductions.
"Trading throughout the Period was characterised by a soft UK market backdrop affecting revenue in both the residential and commercial sectors as well as a decline in revenue attributable to the company's largest customer," Headlam said. "Performance was further affected by the adverse weather conditions experienced during February and March 2018 which reduced footfall to the company's customer base within the residential sector."
Business has improved in May and is broadly in line with expectations, Headlam said. "The company's meeting of expectations for 2018 will largely be reliant on trading in the traditionally stronger second half of the year and the level of weakness experienced in the Period not continuing," it added.