Investors carpet Victoria over strategy
Shares in floorcoverings group Victoria fell 15% yesterday, wiping off £80m from the company’s market value as investors took a dim view of the company’s decision to grow market share instead of profits.
Its shares closed last night at a two-year low of 369p, 60% below its price last May.
The reaction came despite Victoria providing “a considerable degree of granularity about the actions” it had taken with the aim of reassuring shareholders.
The Kidderminster-based group is forecasting the current financial year, to March, will deliver underlying pre-tax profits that are up to 39% higher than last year’s £40.8m, benefitting from eight months’ contribution from Ceramica Saloni, but below expectations.
It is forecasting that its strategy focusing on growing market share in flat and falling markets will “materially enhance” profits in the next financial year.
The Kidderminster-based company has been absorbing rising costs in raw materials and says it has been growing revenues in “difficult market conditions”.
It estimates the market in the UK and Australia is down 6-8% and is flat in Europe.
In a statement to the stock market yesterday, Victoria said: “With the strategy continuing to deliver increasing revenues and meaningful market share gains, the key now is to ensure margins continue to increase.
“In the November announcement the Group referenced plans to recover some margin gains temporarily foregone in the drive for top-line growth.
“Almost all these actions Victoria planned to take to increase margins have now been successfully completed.”