Victorian Plumbing Posts Increased Turnover & Reduced Operating Profit

• Strong growth in profits and successful completion of the warehouse transformation.  
• Well positioned for further growth 

Victorian Plumbing Group plc ("Victorian Plumbing", the "Group"), the UK's leading bathroom retailer¹, announces its audited results for the year ended 30 September 2024 ("2024"), highlighting the significant progress made against its strategic priorities.

Financial highlights

• Revenue growth of 4% to £295.7m (2023: £285.1m); on a like-for-like ("LFL") basis, excluding the impact of the acquisition of AHK Designs Limited ("Victoria Plum") in May 2024, revenue decreased 1%, still outperforming the wider RMI market¹⁰.

o  Order volume grew by 10% to over one million orders for the first time and average order value ("AOV")¹¹ decreased by 5% in the same period; LFL order volume growth of 3% was offset by an AOV decrease of 4%, as customers continue to buy an increasing proportion of our own brand products.

• Strong gross profit growth of 10% to £147.8m (2023: £134.6m); LFL gross profit up 5%.

o  Gross profit margin stable in H2 2024 at 50% (H1 2024: 50%), with an increase in 2024 full year gross profit margin to 50% (2023: 47%); LFL gross profit margin was also 50%, representing our highest gross margin since listing in 2021, underpinned by own brand sales.

o  Profitability has improved year-on-year, driven by product mix shifting towards Victorian Plumbing own brand ranges as well as by reduced shipping costs and favourable foreign exchange movements. 

• Adjusted EBITDA of £27.2m up 14% versus the prior year (2023: £23.8m) with adjusted EBITDA margin progression to 9% in 2024 from 8% last year; on a LFL basis, adjusted EBITDA of £29.4m up on last year by 24%.
  
  
• Operating profit of £11.2m decreased by 27% (2023: £15.3m) after exceptional costs of £8.2m associated with the warehouse transformation and the acquisition and closure of Victoria Plum.
  
  
• Adjusted PBT of £23.1m grew by 14% versus the prior year (2023: £20.3m) with adjusted PBT margin¹² progression from 7% last year to 8% in 2024.
  
  
• PBT was £9.0m (2023: £15.6m), after £11.0m of exceptional costs associated with the warehouse transformation and Victoria Plum investment, and £3.1m of share-based payments.
  
  
• Free cash flow of £18.6m (2023: £16.1m) and operating cash conversion of 68% (2023: 68%). 

• Robust, debt-free balance sheet with closing cash position of £11.2m (2023: £46.4m), following investment in acquiring Victoria Plum for consideration of £22.2m and warehouse transformation spend of £26.4m.
   
• Adjusted diluted EPS of 5.3p, reflecting a 13% increase.
   
• Proposed final ordinary dividend of 1.09p, giving a total ordinary dividend of 1.61p for the year (2023: 1.40p) while maintaining a robust balance sheet with a strong cash position.

Operational and strategic highlights

• Consolidated our position as the UK's number one bathroom retailer, testament to the strength of our brand, our extensive range and availability.
  
  
• Completed the acquisition of Victoria Plum for £22.2m on 17 May 2024. The acquisition contributed £14.7m of revenue and incurred an adjusted EBITDA loss of £2.2m during the four and a half month period to the end of the financial year.

o    As previously announced, we took the decision in August 2024 to close Victoria Plum and its operations in Doncaster. This resulted in the website traffic being redirected to Victorian Plumbing from November 2024, with all remaining inventory transferred from the exited Doncaster site by 31 January 2025. 

• Successfully transitioned into the new 544,000 square feet distribution centre ("DC") in Leyland, Lancashire and, by the end of December 2024, were dispatching all orders from our new warehouse infrastructure.
   
• Customers continued to purchase proportionately more of our own brand products, reducing AOV by 4% (on a LFL basis); own brand products represented 79% of total revenue (2023: 78%), which had a beneficial impact on gross margin.
   
• Online marketing spend as a percentage of revenue (on a LFL basis) reduced from 26.3% to 26.2% which helped to fund, in part, a strategic increase in brand marketing from £4.2m in 2023 to £6.9m in 2024.

o  Our brand awareness score¹³ improved to 66% (2023: 64%). 

• Progress in our strategic growth areas of 'trade' and 'expansion categories'.

o  Trade revenue grew 13% to £67.3m (2023: £59.5m), representing 23% of total revenue (2023: 21%). Our Victorian Plumbing app, designed with both trade and consumer in mind, was enhanced in summer 2024 and is helping to drive further engagement, with c.2% of revenue now generated through the app.

o  Tiles and décor revenue grew by 23% to £12.4m (2023: £10.1m) and our new warehouse infrastructure will facilitate further growth. 

• Investment in people and technology.

o  Bolstered our dedicated Trade team during H1 2024, helping us to attract new trade customers and drive further growth in trade revenue.

o  Introduced new front end website features such as an improved search tool that encompasses AI technology and enhanced product detail pages, along with advanced back end integration with our couriers and upgrades to our warehouse management system.

• Trustpilot rating of 'Excellent' - a sector-leading average score¹⁴ improving in the year to 4.6 out of 5.0 (2023: 4.5). 

Current trading and outlook 

• Overall Q1 revenue was up 3% on 2024, against a tough comparator.

o  Trading in October and November was soft, impacted by:

§ A cautious approach to marketing as we sought to bed in our new warehouse infrastructure without disrupting the customer experience; and

§ Ongoing UK consumer uncertainty.

o   As the transition to our new warehouse infrastructure neared completion, we reverted to our usual marketing approach and, pleasingly, we recorded high single digit growth in December.

• Gross profit margin improvement continues as the benefits of the closure of Victoria Plum and our new warehouse infrastructure are starting to come through (albeit some of this benefit will be eroded by above inflationary increases in National Living Wage and employer national insurance costs). 
  
  
• Through 2025 we will prioritise our expansion category growth plans and more confidently spend on efficient marketing to drive more volume.
  
  
• We remain confident in delivering profit in line with full year market expectations.

Mark Radcliffe, Founder and Chief Executive Officer of Victorian Plumbing, said:

"We have successfully delivered on two strategic priorities, firstly completing our warehouse transformation on time and in line with budget and, secondly, to accelerate growth through the acquisition of our namesake Victoria Plum, which reduces considerable brand marketing confusion for our customers.

"2024 has been a year of transformation against a subdued trading backdrop and continued uncertainty in UK consumer behaviour. Despite this, our clearly defined strategy and unique business model have resulted in increased order volumes and resilient average order values, with customers continuing to appreciate the choice of great value products that we offer across our ranges. 

"As a highly cash generative business with a strong balance sheet, we continue to invest in the business; across people, technology and infrastructure. Our new purpose-built 544,000 square feet distribution centre, now fully operational, will enable further growth in the core bathroom category, as well as unlocking strategic category expansion. We are confident that Victorian Plumbing's profitable growth strategy will continue to deliver long-term value to all stakeholders."

Source : Victorian Plumbing

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