MIDAS SHARE TIPS: Carpet king Likewise doubled its sales in a year

Tony Brewer barely had any shorts left when he started working in the carpet industry. A quiet teenager, fresh out of school, he learned the trade from the bottom up and by 1992 had risen enough to start a new company, Headlam.

Eight years later, he was named CEO, and spent 16 years at the helm, during which time the company became the largest flooring company in Europe and its shares rose more than 230 percent.

Now Brewer is trying to do something similar Likewisea company he founded in 2018 and listed on the stock exchange in 2021. The company floated at 25 pence a share and generated £60 million in sales that year, with a profit of £1.6 million.

Results for 2022 will be revealed on Tuesday, but Brewer has already told investors that revenue more than doubled to £124m last year, while a profit of £2.5m is forecast alongside a dividend of 0.2p. Brewer is expected to maintain a confident tone for 2023 as well. Still, shares of Evenzo are down just 24 pence, with market watchers baffled by the impact of the economic pressure on both operating costs and consumer spending.

This reaction seems exaggerated. Brewer has a stated target of increasing turnover to £200 million in the coming years by creating a robust and efficient business and taking market share from other operators. Progress is encouraging, but the pace should accelerate in the coming years as recent investments bear fruit.

Each year, retailers spend around £2 billion stocking their stores with carpet, tiles and other floor coverings.

They buy these goods from distributors, most of which are small, local firms. Brewer built Headlam into something different, an industry leader that could offer retailers lower prices, faster deliveries and more attractive storefronts than most rivals. Over time, Brewer developed relationships with manufacturers across Europe and retailers in the UK and abroad.

That network still persists at Evenzo, bolstered by 19 loyal executives who joined Brewer from his former workplace and built a series of contacts with them. Together they plan to make Likely a top player in floor distribution, selling their wares to thousands of independent stores from Scotland to the West Country.

Doing this effectively can be a complex task, requiring strategically located warehouses and well-thought-out logistics. Brewer and his team have made sure they can deliver the goods over the last few years, setting up operations in centers across the country, including Leeds, Birmingham and Newbury, so shops can receive carpets quickly wherever they are.

Heavy investment has also been made in sales, not only lashing goods to retailers, but also helping them buy the right products for their neighborhood and display them attractively.

Gray carpet is the most popular choice among homeowners, but consumers are also drawn to tiles in every shade, as well as laminates, made to look like natural wood.

Some observers worry that spending will fall as families struggle to make ends meet. However, there is evidence that millions of people are still eager to buy good value flooring, whether they are decorating a new home or refurbishing an old one. Brewer is also focused on capturing greater market share, so should continue to grow even as sales across the country decline.

The company also sells to commercial customers, such as offices, schools and hospitals, where pricing and reliability are paramount.

Midas verdict: Similarly, equities have suffered from broader concerns about consumer spending, but at 24p those fears are oversold. Brewer has been in the flooring market for over 45 years, has a record of success and is determined to make Evenzo a leading player in the market. As a shareholder of 12 percent, he is also financially motivated. Buy and hold.

Traded on: GOAL ticker: LIKE IT Contact: evenzoplc.com or 0121 817 2900