Headlam pins hopes on major restructure, after £34m loss
A major restructuring by the UK’s largest flooring business is positioning the group for “long-term success” according to its CEO.
Headlam’s CEO Chris Payne is driving an ambitious two-year transformation plan, consolidating 32 businesses into a single, more efficient operation known as Mercado.
He believes the reorganisation of 13 distribution centres, its logistics network and the integration of acquired businesses will mean the country’s biggest flooring firm “can now act as one”.
Payne said: “Given the current market weakness, we can’t rely on the market to give us a helping hand – we need to take proactive steps to broaden our business into new areas. A key focus is capturing market share in the independent retail and regional distribution sectors”.
Revenues declined by 9.7% year-on-year to £593.1m for Headlam, driven by a weak market for big-ticket purchases and a second consecutive year without price inflation in the core distribution market.
Despite reporting an underlying loss before tax of £34.3m in its results for 2024, Headlam has upgraded its profit targets for post-transformation.
Payne said the board is “encouraged” by the strategic progress made with the reorganisation. Upon completion of the plan, Headlam is now targeting a profit improvement of £25m (from £15m+). It’s now expecting to generate £90m from property disposals and working capital optimisation.
It’s picked up £61.3m of cash from property disposals and boosted its net cash to £10.9m at the end of 2024. Sites in Ipswich, Gildersome and Leeds were sold for £50.9m and two Scottish sites were consolidated into one to create an efficient national distribution network, rather than an overlapping one. A new centre in Essex has now opened as well as a small cross-dock facility in Ipswich.
The Coleshill-headquartered business, which was founded 30 years ago, has more than 2,000 staff operating across the UK and grew through an acquisitions process that was completed around 20 years ago.
Payne said: “This led to a fragmented business model with 67 businesses that meant we hit a ceiling of being able to grow the business. We ran out of growing room and we hadn’t fully integrated the businesses either – each still had its own sales teams”.
To stop Headlam also competing with itself, set out clear sales territories and consolidated multiple ordering platforms into one portal to create a simplified customer experience. A point-of-sale refresh will happen this year, to better equip sales staff to connect with customers and reclaim lost market share.
For Payne, his priority is to “make it easier for customers to do business with us, operating efficiently while maintaining high service levels, and streamlining back-office processes to reduce complexity.
“By staying disciplined and focused on what we can control, we will navigate this tough market and position ourselves for long-term success”.
