Headlam jumps after trading rebounds

Headlam shares jumped after the floorcoverings supplier said annual profit would be well above expectations following a rebound in trading.

After a tough second-quarter affected by the Covid-19 crisis, second-half trading has seen a "strong and sustained recovery" to 2019 levels, Headlam said in an investor update.

Revenue in the four months to the end of October fell just 1.2% from a year earlier and November is ahead of the previous year despite the coronavirus lockdown in England and other restrictions, the company said.

Headlam shares rose 14.4% to 373p at 12:23 GMT.

Underlying pretax profit for the period was £13.3m compared with a £1.2m loss in the first half. On the same basis, annual profit will be in the range of £14m to £16m, Headlam said. Underlying pretax profit was £39.5m in 2019.

The recovery was driven by a 10.5% increase in like-for-like UK residential sales in the four months to the end of October, more than making up for a drop in commercial sector demand.

"Given this sustained recovery in performance and management's continued focus on costs, the company now expects to report underlying² profit before tax for the year materially ahead of current market expectations of a breakeven performance," Headlam said.