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Victorian Plumbing sees long-term ‘step change’ in its scale – but first-half revenue slips and profits decline as costs rise

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Victorian Plumbing says it has seen a “step change in the scale” of its business in the last 18 months. Demand for the bathroom pureplay, which grew strongly during the pandemic, is still well ahead of where it was before, although it has fallen back from last year’s lockdown peaks. But rising costs hit first-half pre-tax profits, which were 81% down on last year.

Victorian Plumbing reported revenue of £133.9m in the six months to March 31. That’s 5% down on the same time last year and 39% ahead of the same period two years ago. Pre-tax profits of £2.7m were 81% down from £14.5m a year ago, and 65% down on two years ago as costs rose. Adjusted EBITDA (earnings before interest, tax and asset writedowns) of £6.7m was 67% down on last year, and 24% down on two years ago. Looking ahead, it expects modest growth in the rest of the year and will also continue to take a careful approach to price rises.

The retailer says that shoppers placed 453,000 orders during the first half – 31% more orders than before the pandemic, and 7% fewer than last year, when the UK was in lockdown for a significant part of the period. Order values rose by 2% to £296 last time, while trade revenue was 18% ahead of last year, at £24.6m. Its audience, of 2.72m unique visitors a month, as measured through Google Analytics, is 40% ahead of pre-pandemic levels (1.95m), but 6% lower than last year (2.89m).

The retailer says today’s figures demonstrate that “market share gains made through the pandemic are here to stay”.

In the first half of the year, it sold a range of 24,000 products from 125 own and third-party brands. But it says that rising supply chain costs, from products to the cost of shipping and distribution had hit gross profit margins by five percentage points (5pp). Investment on marketing is also increasing, with spending rising to 30% of revenue.

Mark Radcliffe, founder and chief executive of Victorian Plumbing Group, says: “Victorian Plumbing remains the go-to online retailer for consumers who are looking for bathroom products. Our market-leading proposition and our innovative and proactive approach to marketing have enabled us to continue growing our market share, even against a challenging market backdrop.

“Following a nine-month period during which the economy was opening up after Covid-19 restrictions and discretionary spending has been more focused on leisure activities, our relentless focus on investing in quality and innovation has resulted in revenue growing 39% on a two-year basis. I am pleased with the progress we have made with our technological developments, and I am excited about the opportunities presented by our new website. This new platform will enable us to further penetrate our core market and provide the best possible base for us to further expand our trade and adjacent product areas.

“We continue to be focused on our long-term goals. We are making good progress on all of our strategic initiatives and are confident in the future growth prospects of the group.”

Ecommerce strategy

Victorian Plumbing says that while demand for bathroom products has fallen from the highs of 2021, “the pandemic has driven some structural changes that provide good opportunities for growth”. It now aims to use its market and brand position to take market share from both online competitors and physical retailers in the UK, while also expanding into “carefully selected” international markets. It is continuing to develop and test its website replatform programme.

The retailer is also to focus on related products, such as tiles and lighting, by broadening the range that it sells and making them more prominent on its website. It has expanded its design team in order to design more tile ranges. At the same time it is focusing on trade customers, for whom it is currently developing a mobile app. First-half trade revenue was 18% up on the previous year, at £24.6m and accounted for 18% of total sales.

Matthew Walton, senior retail analyst at GlobalData, says: “Victorian Plumbing still expects to record modest growth for the full year, despite these challenging interim results. To help achieve this, it needs to build on the traction it is starting to achieve within trade, which accounted for 18.4% of sales during the period, a 3.5 ppts uplift on last year. This uplift was supported by its first trade-targeted radio ad campaign during the period. Given the more consistent levels of income from tradesmen, targeting this customer group is a sensible approach for Victorian Plumbing to pursue. Its new dedicated trade app, which is currently in development, will also make the transaction more efficient and help it appeal more to this customer base.

“Driving sales in adjacent categories, such as lighting and tiling, is another area of focus for Victorian Plumbing, with the pureplay increasing its range in the latter category. Becoming more of a one-stop location for fitted bathrooms will help it increase the average order value among shoppers. However, given the level of cutting back on discretionary purchases or diverting funds to non-retail activities, it remains to be seen the level of demand among consumers for refurbishing their bathrooms in the short term.”

Victorian Plumbing is a Top250 retailer in RXUK Top500 research.

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