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Headlam prices to rise – will others in the market follow?

Flooring distributor Headlam confirmed earlier this week, in its half-year results, that it will increase its prices between 1% and 10% (an average of 3%) from September to cover the costs of supplier increases due to raw material price inflation.

Discussion about price rises and the general health of retail and the property market are bound to be hot topics next month at The Flooring Show, the UK’s biggest annual flooring industry trade event, which runs in Harrogate.

Event manager Kane Thomas says, “The half-year results from Headlam do not contain any surprises in terms of market commentary, but their commitment to price rises may well give food for thought to the many independent retailers who use the show to meet and spot new suppliers. It will be interesting to see if other suppliers also announce price rises.”

The interim results came with a warning from the Headlam Group that its full-year results would likely be at the lower end of analysts’ expectations following a drop in first-half underlying sales. The announcement sent its shares down 6.6 percent, according to the Reuters news agency.

The warning from the company, which services both the retail and contract markets, comes as one of the sector’s major retailers, Carpetright, closes stores as part of a creditor-approved restructuring.

“There is no question that the flooring market is facing tough conditions, but there are still opportunities for retailers prepared to learn and take on the challenge of multi-channel selling and for companies who can bring genuinely new and exciting product to the market. The Flooring Show is a great place to meet the people behind the brands and companies who continue to work hard, learn and do well,” commented Kane.

In its half-year announcement chief executive of Headlam, Steve Wilson said:

“We are pleased to report further growth and an increase in our market position during the first six months of 2018. However, given the current softness in the UK floorcovering market and the associated trading impact on the Company’s UK businesses coupled with the current indications that these conditions are likely to continue during the second half of the year, the Board now expects that the full year outcome, whilst ahead of the full year 2017, will be towards the lower end of current market expectations.”

City commentary on the report included a note from brokerage Peel Hunt stating ” The market is likely to remain tough given the slow property market,” adding that Headlam’s planned price increases should deliver “material” stock profits. Peel Hunt then forecast an adjusted profit for Headlam of 44 million pounds versus 40.7 million in 2017.

The Flooring Show runs from 16-18 September inclusive at the Harrogate Convention Centre, Harrogate.

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