Retail

Colefax posts record profits on decorating boom


Fabrics group Colefax has reported record full-year profits fuelled by the decorating boom during the pandemic, although it warned that inflation could hinder sales growth.

The Aim-listed company posted a pre-tax profit of £10.82mn in the year to the end of April, up from £5.42mn the previous year. Sales jumped by almost a third to £102mn over the period.

David Green, chair and chief executive, said the “exceptional” performance over the period “reflects extremely favourable market conditions in the US and the UK”.

“One of the consequences of the pandemic was a surge in housing transactions and home-related spending and this has been the main driver of our business over the last financial year,” he said.

The group, an international designer and fabric distributor, sells most of its wallpaper and material for between £75 and £100 a metre, although some rolls cost as much as £450 according to the company’s website. Shares rose 3 per cent on Wednesday to £8.08p following the profit announcement.

However, the company warned that the effect of surging material costs and a slowdown in the housing market could decelerate future sales growth.

“Rising interest rates and high levels of inflation have already started to slow housing market activity and we are therefore cautious about prospects for the coming year especially as we tend to lag changes in the housing market,” Green said.

“We are also experiencing high levels of cost inflation especially from our fabric suppliers whose manufacturing operations are being impacted by large increases in energy and raw materials costs,” he added.

As a result, Green said it was “unrealistic to expect continued sales growth in the current year”, although he noted that the “premium end” was slightly more sheltered from inflation than the rest of the market.

Colefax’s fabric portfolio, which constitutes the majority of the group’s turnover, had a strong year. Pre-tax profit in the division jumped 60 per cent to £9.29mn, while sales increased more than a fifth.

The group said it had also benefited from the strengthening of the dollar, noting that it generates more than 60 per cent of the fabric division’s revenues in the US.

Its decorating division shifted to a pre-tax profit of £1.48mn after a £680,000 loss last year, after sales increased 153 per cent, partly due to the completion of delayed projects.

The Kingcome furniture division reported a 72 per cent drop in profit, however, as a result of significant increases in the cost of raw materials and energy.



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