Introduction
Likewise Group plc, a leading distributor of residential and commercial floor coverings in the UK, has demonstrated remarkable growth and strategic expansion in a competitive market. The recent AGM update, covering the period up to 18 June 2024, highlights an 8.5% year-on-year increase in gross sales revenue, showcasing the group’s resilience and effective market strategies.
Performance Overview
The growth in sales revenue, particularly driven by the Likewise Branded businesses, underscores the group’s ability to capture market share from established competitors. This performance is especially notable given the challenging market conditions for domestic flooring. WH Ireland analyst John Cummins remarks, “Likewise’s success in increasing revenue in a subdued market reflects the effectiveness of their market share strategies and investment in sales infrastructure.”
Strategic Investments and Expansion
A significant factor contributing to Likewise’s growth is their continuous investment in expanding their sales force and infrastructure. Since November 2023, the company has added 13 new sales staff, bringing the total to 94. This strategic hiring has enhanced their penetration in existing regions and extended their reach into previously underserved areas, such as South-West England.
The group’s focus on strengthening its presence through increased sales staff and point-of-sale materials is paying off. For instance, Likewise Branded sales grew by 14.6%, and Likewise Floors sales surged by 19.7% during this period. This investment in human resources and marketing tools is pivotal in driving revenue growth and market expansion.
Financial Performance and Projections
Likewise’s robust financial health is evident from the reported FY2023 revenue of £139.5 million, a 12.9% increase from the previous year, and a profit before tax (PBT) of £2.3 million. The company’s strategic investments are expected to yield further growth, with revenue projections of £150 million for FY2024 and £174.1 million by FY2026. WH Ireland’s forecasts indicate a progressive increase in operational gearing, leveraging the company’s well-invested logistics platform to achieve these targets.
Cummins notes, “The current multiples ascribed to Likewise shares are undemanding, given the company’s market share gains and potential for further margin expansion.” WH Ireland maintains a fair value estimate of 30p per share, reflecting confidence in Likewise’s long-term strategy and growth potential.
Dividend and Shareholder Value
The Board’s recommendation of a 0.35p total dividend for FY23 aligns with the company’s policy of progressive dividend increases following substantial infrastructure investment. This approach not only rewards shareholders but also signals Likewise’s financial stability and future growth prospects.
Market Outlook and Risks
Despite the positive outlook, Cummins cautions that risks remain, particularly in executing the long-term strategy amidst a challenging market environment. However, the potential for margin expansion through operational efficiencies and market share gains positions Likewise favourably for sustainable growth.
Final Thoughts
Likewise Group plc’s impressive growth trajectory and strategic initiatives underscore its resilience and market acumen. With continued investment in sales infrastructure and a clear strategy for expansion, Likewise is well-positioned to achieve its medium-term revenue target of over £200 million. WH Ireland’s optimistic valuation reflects the company’s strong performance and future potential, making Likewise a compelling player in the UK flooring market.
