CMO Group Posts 'Resilient' Performance And Market Share Growth

• Resilient performance driven by best-in-class model and market share growth 

CMO Group PLC ("CMO" or the "Group"), the UK's largest online-only retailer of building materials, today announces its interim results for the half year to 30 June 2024. 

While H1 has been tough and the market remains uncertain, there are material signs of recovery, and we have seen positive trends and momentum build since the half year end. Notably, we are seeing a steady increase in Average Order Value (AOV) with a 3.5% increase from Q1 to Q2 and a further increase of 6% from Q2 to date.

Financial performance

• CMO delivered a resilient performance against a difficult market backdrop in H1 2024 which has been well-publicised. In H1 2024 GfK reported YoY declines of 6% and 16.2% in the Builders Merchant and Tiles market, respectively, with the online segment of the Tiles market particularly challenging with a drop of 17.8% YoY.
  
  
• As a result, for H1 2024, total revenue was £30.3m (H1 2023: £36.9m) and gross profit £6.4m (H1 2023: £8.0m).
  
  
• Operational costs reduced £1m year-on-year following planned management action.
  
  
• EBITDA¹ was £38k (H1 2023: £613k).
  
  
• The Group continues to have a sound financial position. The Group's net debt position is £2.2m (H1 2023: net cash £1m). Cash at the end of H1 2024 stood at £2.5m (H1 2023: £4.7m), with available facilities of £3.0m.   

Market share gain and continued progress on strategy

• 2.7 percentage points growth in market share² of the online Builders Merchant segment between Q2 2023 and Q2 2024.
  
  
• Continued delivery of the Group's mission to bring the widest range of products to market through the launch of LANDSCAPING SUPERSTORE providing 200% more product choice to CMO customers.
  
  
• Launch of SUPER REWARDS customer loyalty program with purchase frequency up 204% compared to the standard customer profile.
  
  
• Marketable database has increased 17% vs. H1 2023, in line with targets, and will help us capitalise on continued growth in driving customer retention.
  
  
• CMO has successfully migrated its server infrastructure to AWS, ensuring best-in-class resilience, scalability, and the capability to integrate new technologies in the future.

¹ Adjusted EBITDA is defined earnings before interest, tax, depreciation and amortisation, foreign exchange, share option expense, and other costs as defined by management.

 ² Source: GfK. 

Current Trading & Outlook 

Note: Like-for-like sales numbers provided are for sales, with the exception of September, which are order intake figures 

There are material signs of recovery. We are encouraged by improvements in key market indicators: the first interest rate cut in several years, rising consumer confidence, and the highest mortgage approval rates in three years. These early signs suggest that people are beginning to reinvest in their properties. 

Trading in Q3 has seen a continuation of the trend seen earlier in the year with sales stabilising. Notably, we are seeing a steady increase in Average Order Value (AOV), particularly in September as we enter the peak trading season. We continue to maintain the improvements made in gross margin.

The operational efficiencies and margin improvements we have achieved provide strong leverage for future growth. We continue to maintain a strong focus on cash with net debt expected to be £3.2m at year end.

Combined with the continued expansion of our websites and product range, the management team are confident that CMO is well-positioned for growth as the market continues to recover.

Dean Murray, Chief Executive of CMO Group PLC, commented:

"The market remains challenging, especially in the Tiles category, but I am proud of the CMO team's commitment to our strategic initiatives. We have successfully improved margins and implemented operational efficiencies, which position us well for future growth. Our unique business model has allowed us to increase our share in the online merchant market, and the launch of our SUPER REWARDS loyalty program will help us capitalise on our growing customer database.

There are encouraging early signs of market improvement, and Q3 trading has shown positive trends. While conditions will remain challenging, I am confident that the steps we have taken mean that CMO is prepared and primed for growth as the market recovery gains momentum."

Source : CMO Group plc

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