Victoria tactics pay off in downturn

However, it expects full year results will be in line with expectations and more heavily weighted to the second half than normal.

Victoria said its UK business is performing robustly despite “extremely tough” trading conditions on the high street.

The group reported a 7.2 per cent increase in underlying UK sales in the three months to June 30.

It said weak residential sales in the three months to June 30 were more than compensated for by a good performance in both the contract and export markets.

Victoria’s export sales have grown strongly and it has won a number of contracts in the hospitality sector including the Hotel Bristol in Paris.

Sales to leading department store chain John Lewis and to the insurance replacement market were also ahead of last year.

Victoria, which has its own yarn spinning mill in Holmfirth, is the largest supplier to John Lewis.

The store chain, which has been a customer of Victoria for 30 years, has proved remarkably resilient during the economic downturn.

Victoria makes 70 per cent of its sales from the independent retail sector and it has a fast-growing business supplying the insurance replacement market.

Victoria’s overall sales fell seven per cent following a slowdown in the Australian consumer market.

The group said that while the significant slowdown in the Australasian consumer market seen in the first three months of 2012 has now levelled off, its impact has affected the beginning of this financial year, which started on April 1.

In the first quarter of the current financial year, revenues in Australia fell 10.9 per cent on what was a very strong comparable first quarter last year.

The group started selling luxury vinyl tiles to the UK residential market in April.

Victoria’s managing director Alan Bullock said that while it is still very early days the group has been encouraged by the “excellent” reaction from the market and the group’s customers.

The new product portfolio is now being rolled out into the contract market and, after some early wins Victoria said it is very encouraged with progress.

In Australia, Victoria has launched a programme of Stainmaster EverSoft solution dyed nylon carpet ranges and said these have sold very well.

Total group revenues in the three months to June 30 fell 7.0 per cent compared with the corresponding period last year and by 5.9 per cent in constant currency terms.

The group recently announced the results of its strategic review which concluded it should develop its Australian and UK businesses through sales growth, margin enhancement and a shift towards a distribution based business from its historic manufacturing and supply model.

The board has also decided that mergers and acquisitions should be looked at where there are opportunities to generate accelerated returns.

Victoria will update shareholders on its trading and strategic plans at the forthcoming annual general meeting on August 31.

Earlier this year the group said it intends to put a resolution to shareholders proposing a move from the Official List to AIM.

The company said it has almost completed the work required to put this proposal to shareholders, but recent changes to the board have caused a hiatus in the process.

The group hopes to dispatch the required circular to shareholders shortly after the annual general meeting.

Earlier this year the group put itself up for sale, but suspended the sales process after potential buyers expressed concerns about an activist investor looking to replace the board.

At the time, the company said it would suspend the sale process until after a general meeting called by an investor group led by former chairman Alexander Anton.

This general meeting was held in March and resulted in success for the investor group when four new non-executives, Katherine Innes Ker, Alexander Anton, Geoff Wilding and Sir Bryan Nicholson were appointed to the board.

Ms Innes Ker was appointed chairman and also chairman of the company’s remuneration and nominations committees. Sir Bryan was appointed chairman of the audit committee.

Independent non-executive directors’ chairman Nikki Beckett and senior independent director Peter Jensen resigned.

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