Safestyle issues stark profit warning as it battles against ‘aggressive’ new market entrant

Bradford-based window retailer and manufacturer Safestyle has this morning issued a stark profit warning after competitor activity has “intensified” and resulted in a very weak order intake.

This morning’s update follows the group’s final results for 2017, published on 22 March, reported pre-tax profits of £13.8m, a 28% drop from £19.3m in 2016. The firm said the beginning of the year had been difficult with a continuing deterioration in the market resulting from declining consumer confidence.

In a profit warning on the markets today, Safestyle said: “This was exacerbated by the activities of an aggressive new market entrant and it was noted that this competitor’s actions were impacting the Group in certain areas of its operations, particularly in relation to its Sales and Canvass divisions. As a result, the Group’s order intake in 2018 to date had been weak and its market share was under pressure. 

“The Board reports that, since then, the activities of this competitor have intensified and the Group has taken longer to rebuild its order intake to the rate previously anticipated and has also experienced cost increases as management takes the necessary actions to address these challenges.”

In March, Safestyle proposed a final dividend of 7.5p per share, subject to the approval of shareholders at the Annual General Meeting to be held on 17 May 2018. This morning, the firm said it was cancelling the dividend which was due to be paid on 9 July.

Safestyle added that it was “the most responsible course of action” to preserve the Group’s cash.

Safestyle said it was now taking a “cautious approach” to the prospect of further short-term disruption to the Group’s operations. The firm added: “Therefore, the Board now expects Group revenues and underlying profit before tax for the year ending 31 December 2018 to be significantly below current market expectations with profits for the year expected to be heavily weighted to the second half.”

Steve Halbert, non-executive chairman, has also resigned from the Board with immediate effect. Peter Richardson, an existing non-executive director at Safestyle and a member of the audit, remuneration and nominations committees, has been appointed non-executive chairman with immediate effect. 

Halbert joined the Safestyle Board in July 2016. He was a group board director and chief operating officer at Dyson for almost 15 years, during which time the business grew from a revenue base of £40m to more than £1bn. His early career was spent in the sales and marketing functions of Cadbury Schweppes, Coca-Cola and Colgate Palmolive.

Richardson said:  “On behalf of the Board, I would like to acknowledge the significant contribution Steve has made to the Group. He was the Group’s Chairman at the time of its successful IPO in 2013 and has provided wise counsel, guidance and support to the Board over the years. We wish him the very best for the future.

“I am now looking forward to working with the Board and the executive team during what is a challenging period for the Group as it undertakes a number of actions to emerge as a stronger, fitter, more agile business.”

Safestle added that the board remained “resolutely focused” on protecting Safestyle’s leading market position. The firm added: “Early evidence shows that the Group’s Sales and Canvass teams are more effective in those locations where rebuilding has occurred. As an immediate priority, the Board is undertaking a detailed strategic review of its operations and has a number of measures in hand aimed at addressing the competitive situation and improving performance.”

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