Investment Column: Headlam

Headlam

LIKE MR MILLS, Ian Kirkham, chief executive of carpet and curtains distributor , is looking forward to the millennium. He says we like to do up our houses in the autumn ready for Christmas, and the effect will be more pronounced this year. The uplift will be welcome.

Although acquisitions have seen 's shares more than double since November, the existing businesses are suffering. In floor coverings, sales almost held flat against a strong performance last year. In furnishings, tough markets led to a 16 per cent drop in sales.

With the benefit of acquisitions in the UK and France, overall margins strengthened to 31 per cent. sees scope for further improvement by turning around its loss-making European businesses. Meanwhile, the effect of interest rates on the housing, and consequently decoration markets, should soon kick in. is cutting costs and planning to expand the division to capitalise on an expected improvement in its markets in coming months.

Recovery in 's European markets could be some way off. Analysts expect pre-tax profits of pounds 31.5m and earnings of 27.2p per share this year. The shares have more than doubled since November and at 411p, just 1.5p below their high, are looking fully valued.

u