Weak demand equals "sales deferred, not sales lost" says industry leader
Flooring industry leader Victoria PLC sees demand stabilising and exciting, long-term prospects of a market re-bound.
"Weak consumer demand for flooring has historically always resulted in revenue deferred, not revenue forgone," says Victoria CEO Geoff Wilding. "The threadbare rug or stained carpet reluctantly tolerated during economic hard times is immediately replaced when a recovery in discretionary spending power allows."
The CEO was reporting the PLC's half year results to shareholders after a tough six months to September 28 which saw revenues drop from £625m the previous half-year to £569m in 2024. Underlying profits before tax of £32m in 2023 turned into losses of £13.6m this half-year as margins fell to 8.8% from 14.8%.
- "Flooring is a staple product required in every building which has a very long growth trend and an assured replacement cycle and the Board believe demand will rebound as markets experience a more favourable interest rate environment," said the company's statement to investors.
Geoff Wilding added: "The long-term prospects for Victoria, continue to be exciting. In the medium term, as demand normalises, we are confident Victoria's revenue will recover and, with the higher operational leverage now inherent in the business, we anticipate earnings increasing sharply with mid-high teen margins achievable."
Victoria says the flooring industry is experiencing the longest period of subdued consumer demand in a generation as a result of macroeconomic pressures but says it is now stabilising.
"We are confident the factors that have been impacting demand are transitory, and at some point, the headwinds the industry has experienced for the last two years will turn into tailwinds and the Board is encouraged by recent positive data in Victoria's end markets," says its statement which cited improvements in the housing sector, lower interest rates and salaries catching up with inflation as reasons to be cheerful.
Meanwhile the PLC has been busy saving money. £12 million has been permanently removed from its fixed cost base during the half-year period and a further £20 million per annum of savings is being executed, such that the impact on FY2026 earnings will be circa £32 million in total, it says.
When demand does normalise from its present low, Victoria believers that will represent a 20% uplift, euvalent to £100m extra revenue for the Group.
