Activist shareholder First Seagull has insisted it has been doing the work of Headlam directors in talking to suppliers, customers, and former employees, in the latest salvo as the battle for leadership of the flooring distributor continues.
In a letter to shareholders, Stian Husvaeg, First Seagull md says ‘The board characterises our contact with suppliers, customers, and former employees as activity “beyond normal shareholder activity” that has created “concern amongst important stakeholders.” That is one way of characterising the investigative work they should have conducted themselves years ago to foresee and avoid this disaster.
‘We were the first to conduct exit interviews with key employees who had left Headlam, not HR, not the board: they were never interested in learning. The picture that emerged from these conversations was consistent and damning.
‘Far from being “concerned” by our engagement, the stakeholders we spoke with expressed relief that someone was finally asking the right questions. These were not disgruntled individuals seeking to cause disruption, but people with genuine affection for what Headlam once was and genuine alarm about its future. They had watched the business deteriorate and found no audience among the board willing to hear them. The board’s attempt to frame their candour as a problem of our making says more about its own instinct for self-preservation than about the state of its stakeholder relationships.’
Husvaeg also calls for a trading statement, so shareholders can understand the group’s current position; says it has received ‘overwhelming support’; the non-executive directors on the board are hanging on to keep their fees; Stephen Bird failed as chairman by not having a management succession plan; and the management culture has made it impossible for the group to attract the talent it needs.
‘We have received overwhelming support from stakeholders since requisitioning for change at Headlam. The supportive messages and offers to help have spanned across current and former employees, former directors, small and large retailers, and suppliers. The battle for a new start for Headlam is turning out to be a grassroots movement, the requisition was just the spark people were waiting for.
‘The board’s reply is another exercise in misinformation. It is selective with facts and convenient in its sequencing, while pleading with shareholders for yet more time and trust. These are the same directors whose judgement and decisions have destroyed 94% of shareholder value and have had five years to prove themselves. Their reply is unfortunately just another example of an ownerless board resisting the inevitable in hopes of keeping their board fees.
‘We call on the board to release a current trading update without delay. Competitors’ strong updates and chatter from the industry signal an accelerated deterioration at Headlam under this board. Shareholders are being asked to vote on the future while the board withholds the information needed to make an informed decision.
‘We address the Board’s specific claims briefly below for completeness. However, the central message is clear: shareholders and stakeholders are firmly behind this requisition. Headlam employs more than two thousand dedicated individuals, supplies more than ten thousand independent British retailers and until recently played a leading role in the UK flooring industry. It still has the potential to regain an important role, but the window of opportunity is narrowing rapidly.
‘That two large shareholders have sided with the Board is unfortunate, but expected. Headlam barely registers in these funds’ top 100 holdings; the difference between a full recovery and a total loss is immaterial to them. The risk they care about is reputational and the main fear would be to fail unconventionally if they supported us. This is not a vote of confidence for the board. It is the path of least resistance for investors to whom returns are largely irrelevant. For employees, customers, suppliers, and shareholders, who will bear the real consequences, do not have the privilege to ignore reality in the same way. We, therefore, strongly encourage everyone to exercise their shareholder rights and vote against the sitting directors at the AGM in May.
‘From Constructive to a Necessary Intervention
We did not arrive at this requisition hastily, contrary to the board’s characterisation. We initially gave Stephen Bird the benefit of the doubt, hoping he had learned from past failures, and convinced ourselves that continuity still had some value. The tipping point came gradually as we learned more about recent developments and the continued wasting of company resources. The final straw came when reading the chair’s letter in the 2025 annual report, which stood in such stark contrast to reality that we could no longer ignore the evidence. In our next conversation, Bird backtracked on reassurances about sufficient liquidity headroom made as recently as a month prior and immediately after securing a new ABL facility. The position had suddenly shifted: there were now severe inventory availability issues requiring additional capital. This was a result of sloppy management of inventory, exacerbated by wasteful spending on external consultants and an ERP project. That Bird then expected us to fund the consequences of his own incompetence told us everything we needed to know.
‘Bird had been a non-executive director of Headlam since September 2021 and senior independent director from 2022. He had over four years of oversight of the business, its strategy, and the quality of its leadership before his appointment as chair. He then had eleven months as chair before the ceo departed. In that period, the group’s revenues continued to fall, losses deepened, and the balance sheet deteriorated.
‘Succession planning is a fundamental duty the chair owes shareholders. Bird stepping in as executive should never have happened, not just because he is underqualified and lacks both flooring and turnaround experience. But the more uncomfortable question is one of timing. Bird received his final payment from Videndum the same month he installed himself as interim ceo with an executive salary of £500,000. We simply note the facts and invite shareholders to draw their own conclusions. What we will say is this: handsomely rewarding himself financially at the very time the company is struggling with liquidity is not something that sits well with us.
‘The removal of the board is necessary and will accelerate Headlam’s turnaround. We expect the following benefits to materialise.
‘Restore the ability to attract and retain talent with genuine flooring expertise.
‘The current culture, set from the top, has made this impossible. A refreshed board would change that immediately.
‘Restart customer relationships that this board has mismanaged or severed.
‘Years of commercial missteps have cost Headlam real volume with real customers. That is recoverable, but only under leadership that deeply understands the flooring trade.
‘Rebuild supplier relationships that have been treated as replaceable vendor arrangements rather than commercial partnerships. A distributor’s value lies in connecting supply and demand efficiently; the current board has never understood this, and the current strategy reflects that.
‘Resolve inventory availability through smarter purchasing, closer supplier collaboration, and unlocking the financial flexibility needed to restock fast-moving lines. The current shortages are a direct consequence of operational mismanagement and are recoverable.
‘The path to recovery is not overly complicated. But it requires commercial credibility with suppliers and customers, operational discipline, and leadership that flooring professionals are willing to follow. This Board possesses none of those qualities. They have spent five years demonstrating that, and the window to succeed is narrowing.
‘What Stakeholders Are Telling Us
The board characterises our contact with suppliers, customers, and former employees as activity “beyond normal shareholder activity” that has created “concern amongst important stakeholders.” That is one way of characterising the investigative work they should have conducted themselves years ago to foresee and avoid this disaster. We were the first to conduct exit interviews with key employees who had left Headlam, not HR, not the board, they were never interested in learning.
‘The picture that emerged from these conversations was consistent and damning. Far from being “concerned” by our engagement, the stakeholders we spoke with expressed relief that someone was finally asking the right questions. These were not disgruntled individuals seeking to cause disruption, but people with genuine affection for what Headlam once was and genuine alarm about its future. They had watched the business deteriorate and found no audience among the board willing to hear them. The board’s attempt to frame their candour as a problem of our making says more about its own instinct for self-preservation than about the state of its stakeholder relationships.
‘The Path Forward
‘Our requisition proposes the removal of long-serving directors and a full reset bringing in operational, financial, and sector experience directly relevant to what this business requires now. We have key stakeholders ready and lined up to work with us in restoring Headlam, including commercial talent, suppliers and customers.
‘The AGM on 20 May provides the mechanism for the reset Headlam desperately needs. Shareholders who have reviewed the five-year track record, the losses, the market share erosion, the deteriorating balance sheet, and the gap between the board’s statements and reality should vote for the change the company urgently needs.
‘Headlam has genuine assets: a distribution network, a supplier base, long-standing customer relationships, and a market that wants Headlam as a trusted partner. None of those will wait indefinitely to see progress. We are asking shareholders to act while there is still a business worth saving.’
