CMO Group confident despite challenging first half

9th Aug 2024 10:42

(Sharecast News) - Online building materials retailer CMO Group said in an update on Friday that it experienced a challenging first half, with sales falling to £30.3m from £36.9m a year earlier.

The AIM-traded firm put the decline down to poor weather conditions in the first quarter, which significantly impacted the sales in its tiles segment.

However, it said it saw an encouraging recovery in the second quarter and July, particularly in its Plumbing Superstore brand, where like-for-like sales grew 9.6%.

The company noted an improvement in average order value, reflecting a return of consumer confidence in larger renovation and maintenance projects, aligning with broader market trends.

Despite ongoing market challenges, CMO said it was still optimistic about maintaining this positive sales momentum, especially following recent interest rate cuts.

The group said it managed to keep its margins stable by focusing on improving product margins, recovering carriage costs, and reducing digital marketing expenses to below 6%.

It also launched a new loyalty program, 'Super Rewards,' in June, which it said showed promising early results, with orders under the programme nearly double the usual average value.

Additionally, the newly-launched Landscaping Superstore was now fully operational and taking orders, contributing to its strategy of offering the widest range of products in the market.

Financially, the group maintains a stable position with cash reserves of £2.3m at the end of the first half, down from £4.7m year-on-year.

Net debt totalled £2.5m, with available facilities of £3m.

"We are pleased to see early signs of market recovery and are further encouraged by the interest rate cut last week, which will stimulate the market," said chief executive officer Dean Murray.

"The full launch of the Landscaping Superstore marks further, great progress in our mission to provide our customers with everything they need to build or maintain a home."

Murray said the company was also looking forward to seeing how the 'Super Rewards' programme enhanced customer loyalty, rewarding spend and behaviours.

"The positive sales momentum shown throughout the second quarter and into July, combined with our focus on profitable sales and becoming a more efficient business, means that we remain confident about the future."

At 0950 BST, shares in CMO Group were up 1.69% at 15p.

Reporting by Josh White for Sharecast.com.