December 1, 2016 / 9:40 AM / a year ago

UK carpet seller Headlam says full-year profit to beat forecasts despite price rises

LONDON, Dec 1 (Reuters) - British carpet distributor Headlam said full-year profit should beat current market expectations as price rises introduced after the pound fell in the wake of the Brexit vote had not had an adverse impact on revenue.

Shares in the firm, which supplies independent floorcovering retailers and contractors, rose by as much as 5.6 percent in early trade on Thursday.

In August Headlam increased prices on residential floorcoverings imported from continental Europe by 3.5 percent on average to cover the pound’s fall against the euro.

“The price increases ... have remained in place since their introduction in August and, pleasingly, appear to have had no adverse impact on residential sector revenue,” the firm said.

“As a result of this, and due to continued volatility in foreign exchange rates, it is the company’s intention to keep these price increases in place going forward.”

Headlam said it has continued to experience no discernible impact on trading following the EU referendum in June, although August was slightly weaker than expected because of a softer commercial market in Britain.

Consumer spending in Britain has held up since the Brexit vote. However, the Bank of England and many economists fear higher prices caused by the Brexit hit to the value of the pound and slower jobs growth will eat into households’ purchasing power next year.

For the 10 months to Oct. 31 Headlam’s total revenue was up 5.2 percent year-on-year. UK revenue accounted for about 88 percent of the total.

UK like-for-like revenue in the second half of the year to Oct. 31 was up 4.8 percent. Trading during November maintained that trend.

Revenue from the company’s continental European businesses grew 2.6 percent over the 10 months when measured in constant currencies.

“Subject to trade continuing as anticipated during the remaining important weeks of the year, the company expects to report preliminary results (for 2016) before non-recurring items ahead of current consensus market expectations,” it said.

Prior to Thursday’s update analysts were on average forecasting a pretax profit of 37 million pounds ($46.4 million), up from 36 million pounds in 2015.

Shares in Headlam were up 4 percent at 492 pence at 0936 GMT. ($1 = 0.7978 pounds) (Reporting by James Davey; Editing by Susan Fenton)

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