Shares in Headlam Group PLC slid on Thursday after warning underlying pretax profit for the year will be ‘significantly below current market expectations’.

The Birmingham, England-based floor coverings distributor said recent residential trading volumes are weaker than expectations, with recovery now expected to take place over a more prolonged period.

Rolling 12-month volumes are around 20% lower than 2019 and this backdrop will more than offset the company’s positive strategic performance and mitigating actions in the near term, it said.

As previously announced in May, as well as lower residential volumes, gross margin and profit in the first half were also impacted by a reduction in manufacturer led price increases and increased operating costs versus the first half of 2022.

People and energy costs were up almost £5 million the first half against the year before, due to inflationary pressures, despite headcount being reduced in line during the period.

Underlying pretax profit fell to £6 million from £17 million.

With current trading challenging, Headlam intends to temporarily lower dividend cover in respect of the ordinary dividend payment for the full-year to that of pre Covid levels.

Shares in Headlam fell 5.0% to 227 pence in London on Thursday.

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