Leeds Group faces formidable obstacles on its path to recovery. The lasting impacts of the COVID-19 pandemic, the Ukraine conflict, surging inflation, and rising interest rates collectively impede the progress of this UK-based textile wholesaler, primarily focused on Germany and mainland Europe.
In its year-end report, covering the period up to May 31, the company highlights the adverse effects of these factors. Consumer confidence remains severely affected, and profit margins, particularly in the commodity segment, are under pressure.
The conclusion at the close of the year was that the entire market could benefit from some consolidation, as the group continues to grapple with trading difficulties in this challenging landscape.
Nevertheless, the leaner organization remains resolute in its commitment to restoring profitability to its core German trading subsidiary, Hemmers, even in the face of KMR, its sister brand, facing insolvency last year. Challenges persist in textile markets across Germany and other European countries.
Turning to financial results, group revenue for the year decreased to £27.8 million from the previous year’s £29.6 million. However, Hemmers reported a slight sales increase, reaching £24.23 million, up from £24 million.
On a positive note, the group managed to reduce its operating loss to £509,000 from the previous year’s £2.99 million (which included an impairment charge of £1.66 million). The group’s pre-tax loss was also lowered to £893,000 from a loss of £3,245,000, despite increased interest charges of £384,000 compared to £255,000 a year ago.
Looking ahead, management commits to continuous evaluation of the cost base to align with reduced sales levels and to seek operational efficiencies that enhance Hemmers’ competitiveness. The directors will explore all available options to maximize shareholder value.»