Headlam Share Discussion Threads

[bda3490] 06/9/2023 15:20

Retailers of carpet win customers and supply the fitting to tradesmen. If white van man buys direct then retailers don’t present the product and the market shrinks
If it is a plan then surely Headlam should just invest in a showroom and be the retailer and wholesaler ! Probably that’s phase 2 when the trade counters are fully rolled out


Anyway sales 20% below pre pandemic levels and likewise has appeared and Trade choice (?) they seem to have 15-20 outlets for carpets and flooring

[tomps2] 06/9/2023 12:44

Headlam Group (HEAD) Half Year results presentation - September 2023

Headlam Group Chief Executive, Chris Payne and Chief Financial Officer, Adam Phillips present results for the the first six months of the year to 30 June 2023, followed by Q&A.

Watch the video here:

Or listen to the podcast here:

[aim0raider] 06/9/2023 11:29

Is CP in denial or naive to retailer sentiment towards trade counters and 'larger partnerships'?

[bda3490] 05/9/2023 19:57

Back in March the broker forecasts for this year were £ 33.5 m pbt
Now £ 15.4m

That’s not good in any way.

Hardly surprising that home furnishings are struggling!

[pugugly] 05/9/2023 19:35

Re 517 - ALS - Absolutely correct - Cash is King - If no changes in interest rates would expect refinance costs to be in the region of 7%-10% subject to forensic examination of management account by a potential lender. However every case is different so put no reliance on the above -
What are your thoughts?

[my retirement fund] 05/9/2023 09:06

Interesting results, it's difficult to know if it's all macroeconomic or competition. Surely the competition has always been there?

[tomps2] 29/8/2023 09:28

Headlam Group (HEAD) H1 webinar

Tuesday, 5 September, 11:30am

A presentation by Chris Payne, Chief Executive and Adam Phillips, CFO will be followed by Q&A.

Register here: bit.ly/HEAD_H1_23_webinar

[bda3490] 01/8/2023 20:23

Victoria plc
Update today seemed very positive. They are big on carpet and domestic focus

Very upbeat

Likewise seem positive

[essentialinvestor] 28/7/2023 10:55

I first bought Headlam at 76 pence circa 1992, so know the business well,
however do not have a comprehensive understanding of current industry trends,
so the recent discussion here has been very helpful.


Possibly looking at a secular rather than just cyclical challenge?.


HEAD in the past has been a cracking buy near a cyclical cycle low, but now
if this is a longer term secular headwind with changing industry trend, that is something new.

[castleford tiger] 28/7/2023 09:39

Ordinary dividend Recognising shareholders' expectation of
income for dividend income due to the cash generative
shareholders nature of the Company, market leading position,
and relatively modest investment required
to deliver on the strategy. A targeted
bi-annual distribution (paid out of cash)
and cover ratio of around 2x earnings for
the total annual pay out (higher weighting
to final dividend). On an ongoing basis,
is considered against the prevailing economic
environment and market backdrop, and could
be adjusted accordingly.

Last year half the earnings were paid out to give a final dividend of 17.4p.

Profit was 35/40m depending on which measure you use.
Therefore we need to get to 18m or so to maintain the dividend ( whilst paying all earnings out)
This does look value ,but are they suffering with LIKE and others taking market share.?

I think under 200p they look very good value but there maybe more bad news to come as the big ticket items come under more pressure.

So for now i am on the side lines waiting to see the business become more stable.

tiger

[sophia1982] 28/7/2023 08:44

In my understanding, Head is just going in several directions, trying to cover a larger share of the market (see their annual presentation at page 15). However, this does not mean that they sell to different categories of clients at the same price or, at least, I am not aware of that.

[slopsjon2] 27/7/2023 23:13

They are maintaining the dividend, so the cover is reduced. A lot of companies wouldn't even mention the cover in relation to the divi and still keep paying it when it's below 1 even if they have to borrow money to pay it like IBPO. Shareholders got shafted at IPBO.

[jeffian] 27/7/2023 22:52

Other way round, surely? If they cut the dividend 'cover', it goes from 2 to 1? Isn't what they're saying that they will maintain the dividend even if that reduces their stated target of "the Company's targeted cover ratio of around 2x earnings."?

[bda3490] 27/7/2023 22:37

Had to respond to dividend cover being increased. That means retained earnings will be higher than dividend - basically cut. So if dividend cover was one and goes to 2 that’s half the dividend . I think

[elsa7878] 27/7/2023 20:30

Interesting. Therefore that the intention seems to be to take business out of the hands of the independent retailers and therefore by default the new distributors.

Interesting situation. Meanwhile £140 million of property assets (probably now reduced in value) and £150 million in inventory v £190 million market cap.

I can see why it was supported today.

[thelongandtheshortandthetall] 27/7/2023 19:42

Manufacturers tend to prefer to deal with distributors/wholesalers over retailers. Been like that for a very long time.
Then things change, they always do.
Direct to consumer; now means Nike can sell direct to the consumer.
Things are always in flux.

I can understand the retailers being miffed if Headlam sell to the trade fitters at the same price the retailers sell at. Seems pretty clear from the recent annual report they are moving forward aggressively with the trade counter format and large multi site retailers.
They must've done the sums and see greater fortunes with this route to market.

[northerngrowler] 27/7/2023 19:29

The face of all retail has and is changing rapidly and perhaps the flooring trade has been slow to react to this. However it is recognised as being on of the most complex of trades so real experience and knowledge will always be needed.

Cutting out the middleman is interesting. Headlam are a wholesale business and many retailers do not necessarily need Headlam as they can go direct to a manufacturer but they use them for speed and convenience. Which middleman needs the other more is a good question!

[thelongandtheshortandthetall] 27/7/2023 18:49

This is an interesting discussion.

Headlam do seem enthused by the idea of more direct/trade sales and they're aiming at large multi site retailers over the mom and pops - cutting out the middlemen I guess.

[1tx] 27/7/2023 17:22

Interesting comments but perhaps the real problem for independent high street operators is that they are facing increasing competition from carpet & flooring fitters;perhaps the same fitters they once employed or subcontracted to,who are operating themselves without premises and finding their customers online saving the cost of shops now often in frequently less visited locations & are able to offer better prices and make better profits.

[northerngrowler] 27/7/2023 16:24

Hi - yes by traditional I do mean smaller independents that buy what is known as cut lengths and the distributor makes the best margin on these orders. Headlam have been the leader with a high level of service but the others have caught up over the last few years. These independent shops make up the lions share of domestic flooring that is sold in the UK.

[elsa7878] 27/7/2023 15:40

Thanks. So by traditional you mean the shops on the highstreet, particularly the small independents?

[northerngrowler] 27/7/2023 15:29

I can never see them disappearing but I think the days of Headlam being easily the market leader in flooring distribution is seriously under threat. They have continued their consolidation of resources over the last few years and are rolling out more currently so that will help.

However traditional retailers seem very unhappy - the trade counters are open to anyone and Headlam are selling at the same price to all. The smaller to mid sized commercial flooring contractors seem unhappy as Headlam are selling direct to any trade plus end users (councils, main contract builders, etc). It maybe a a recipe for disaster or triumph but time will tell.

The strategy is all in the AGM report and is being rolled out now in a fairly serious way but I do not think they expected the ferocity of the backlash from their existing customers who do have viable alternatives to turn to (Likewise, Trade Choice, Kellars, etc).

[elsa7878] 27/7/2023 14:42

With its freehold properties and huge inventory that dwarfs the market cap it looks bullet proof unless as you suggest their traditional customers are leaving. Why would they be unhappy?

[northerngrowler] 27/7/2023 11:20

Hi - for Headlam the trade counter push and other direct selling to builders and large retailers has to work otherwise I think there will be a rocky road ahead for them, as my anecdotal evidence shows their traditional customer base are leaving them in droves due to this strategy. There are a lot of unhappy Headlam customers out there........