Flooring distributor Likewise has warned that continuing investment and inflation will hit profit margins.
It says that sales continue to increase each month, with like for like sales up 23% in the third quarter and 96% higher overall. It says sales for the year will ‘slightly exceed’ market expectations.
However, it warned that ongoing investment and market conditions will hit profits in this quarter and see flat profits next year.
‘Investment in all aspects of the business has been undertaken over the recent years to create a nationwide platform with a current logistics capacity of 15m cuft. This provides the opportunity to grow revenues and profitability to achieve the long-term aspirations of the group. Notwithstanding the increase in revenues, it is expected that the group’s profitability will be lower than originally anticipated due to unfavourable market conditions caused by the terrible war in Ukraine, political instability in the UK and a particularly hot summer. The pace of investments and inflationary cost pressures have continued into the group’s key trading period and as a result Q4 profitability is expected to be lower than previously anticipated.
‘Subsequently the board is now expecting profit before tax margins to be below current expectations at c2%. Consumer spending is likely to remain volatile and inflationary cost pressures to continue into 2023, and therefore the board expects adjusted profit before tax for the year ending 31 December 2023 to remain broadly in line with FY22.
‘Whilst continuing to invest, the group is also very mindful of increasing profitability, but it does not believe it to be in the best interest of stakeholders to solely maximise short term profitability which would compromise the clearly stated medium to long term objectives. Profits are expected to increase on the previous year and the board is confident in achieving its longer-term aspirations.’
It says it intends to maintain its dividend.
