Merseyside-founded online bathroom retailer Victorian Plumbing says half-year revenues and profits have fallen due to higher costs and lower customer demand. Tony McDonough reports
Online bathroom retailer Victorian Plumbing says it will take a “careful” approach to price rises this year despite its revenues and profits being hit by higher costs and inflation continuing to rise.
For the six months to March 31, 2022, the business is reporting revenues of £133.9m, down 5% on the same period a year ago. However, revenues are 39% higher than the £96m reported in the last half-year period prior to the COVID-19 pandemic.
Pre-tax profits for the half-year period were £2.7m. This was significantly lower than the £14.5m reported for the same period a year ago and lower still than the pre-pandemic figure of £19.7m.
Founded in Formby in Merseyside, Victorian Plumbing floated on the London Stock Exchange’s Alternative Investment Market in June 2021. It raised gross proceeds of £11.6m giving it a market capitalisation on admission of £850m. It was the largest-ever float by a company on AIM.
The business, which employs around 400 people, described its performance in the six-month period as “resilient” as it grappled with rising costs and a fall in customer demand following a surge in sales during the pandemic.
Total orders amounted to 453,000, a 7% decline year-on-year (H1 2021: 486,000) but up 31% on a two-year basis. Average order value increased by 2% to £296 year-on-year, and by 6% on a two-year basis (H1 2021: £289; H1 2020: £278).
Its report said: “Our commitment to growing our market share is unwavering. Through H1 2022 we invested more in our brand and our digital performance-based marketing to successfully grow our market share.”
On the rising costs, it added: “One of our primary objectives is to provide our customers with a wide choice of immediately available products. We held an increased level of stock through the first half of the year to combat disruption caused to our supply chain, most notably the unpredictability of transit time for stock to arrive from the Far East.
“We believe this investment helped us to outperform our competitors through the period. As expected, rising costs throughout the supply chain from product, inbound shipping and outbound distribution have adversely impacted our gross profit margin by five percentage points in the first half of the year.”
Victorian Plumbing says that since the UK started to emerge from COVID-19 lockdowns, people have opted to spend more of their disposable incomes on leisure activities rather than home improvements. However, it remained upbeat about its prospects and said it is looking at expanding overseas.
The company added: “The level of consumer demand for bathroom products has fallen from the highs of 2021, but the pandemic has driven some structural changes that provide good opportunities for growth.
“We are well placed to continue to gain market share in the short term through both these structural tailwinds and by taking share from traditional physical retailers and other online competitors by leveraging our market and brand position.
“In the medium term, we remain encouraged that, with strategic planning and execution, there is a valuable further opportunity to translate our domestic success into carefully selected international market expansion.”