International fabric company continues to be blighted by Covid-19

The unaudited interim results of Leeds Group plc for the six months ended 30 November 2021 have been published.

The activities of the Group are that of a wholesaler and retailer of fabrics and haberdashery and are conducted by its German trading subsidiary Hemmers/Itex Textil Import Export GmbH (“Hemmers”) and Stoff-Ideen-KMR GmbH (“KMR”), a subsidiary of Hemmers also based in Germany.

As already communicated in the AGM statement of 23 November 2021, the ongoing Covid-19 pandemic continues to impact on the Group’s trading activities. It had been expected that the early months of this financial year would be difficult but that there would then be a gradual return to more normal trading levels.

However, the prolonged nature of the pandemic, exacerbated by the emergence of the Omicron variant in late November 2021, has impacted consumer confidence and caused many our customers to become overstocked and reduce demand while they correct that position.

The Group turnover in the first six months of the financial year was £15.5m (2020: £19.9m): Hemmer’s turnover decreased to £12.7m (2020: £15.6m) and KMR turnover decreased to £2.9m (2020: £4.3m).

Hemmers and KMR management teams are monitoring and managing the Covid-19 market situation to ensure the cost base and inventories are aligned over time with the reduced turnover, however, the Group made a loss before tax of £487k (2020: profit of £735k.

Hemmers reported a loss of £192k (2020: profit of £729k) and KMR a loss of £242k (2020: profit of £145k). Management will take further action in the second half of the year to reduce costs further and will also apply for further government financial support.

Group net bank debt, as analysed in note 4, was £5.9m as at 30 November 2021 (30 November 2020: £4m; 31 May 2021: £3.9m). Group debt increased in the first half of the year due to the reduced level of trading and seasonal increased stock levels.

The short-term business outlook remains difficult to predict because of the prolonged nature of the pandemic with new variants continuing to emerge. In the medium term we assume that increased immunity amongst the population will enable a return to more normal trading levels and profitability.