Likewise Group Plc (LON:LIKE) Chief Executive Officer Tony Brewer caught up with DirectorsTalk to discuss key drivers, what sets the group apart from competitors, capacity for increased business, and achieving market forecasts.
Q1: Could you just remind us of what the key drivers are in the business?
A1: I think it’s very much the relationship with the principal flooring manufacturers in the UK, in Europe and farther afield. We’re working closely with those manufacturers to develop new product, identify the right point of sale and sampling to display those products in retailers and then develop the business thereafter.
I think that speed to market is very much a key driver in the business.
Q2: What is it that sets Likewise Group apart from competitors?
A2: I guess very much, the people. I’m sure our competitors have good people as well, but I think we have very good teams across the country in our various businesses. I think also a key feature is that they’ve learned the trade, very much understand the dynamics of the business, the IT, and logistics, have a good feel for the product and, very importantly, customer and supplier relationships.
I think because those people have learned the trade with us, they are very good and important in the development of the business.
Q3: Do you have capacity to handle and process increased business?
A3: Absolutely. We’ve continued to invest over the last four years and developed twelve distribution and logistics centres throughout the UK.
We’re putting increased capacity into our Glasgow distribution centre as part of the Likewise UK network. We are about to start cutting and processing carpet in our Derby distribution centre, specifically for Valley Wholesale Carpets and we’re just waiting for planning permission to extend our Newport distribution centre, which we believe will be operational to give us further capacity in quarter two of next year.
So as the business progresses, I think we’ve put sufficient capacity to be able to develop the business with our stated intent to go well through £200 million of sales and that infrastructure can deliver that.
Q4: How do you view the outlook for the second half?
A4: I think we’re pretty positive. We’ve seen a good first half and sales up 10% as we announced at the AGM last Friday. The seasonality is fairly predictable, and I think we’re well positioned for the autumn to capitalise on that and again, all that investment we’ve done in salespeople, in the infrastructure, in new products, we have every confidence to deliver the opportunities before us.
Q5: Do you think Likewise Group have the ability to achieve the current market forecasts?
A5: Absolutely, and we’re well on course to do that.
We’ve seen a step up in the business, particularly in the second half of last year and the early part of this year where with a higher level of sales, then we can very much achieve the operational gearing and subsequently much higher profitability than we have previously.
We’ve been on a plateau for the last few years at £2 million profit. The market forecast at PBT level is for £4 million for 2025 and we believe we’re well on course to achieve that. Also, within that, of course, we’re absorbing additional costs with the NI A increases at the autumn Budget of last year. We believe we can still achieve that £4 million whilst absorbing that extra £600,000 of cost.
So, the business is very much on track to do that.
