The man who built Headlam returns

Tony Brewer spent 25 years turning Headlam into the UK's dominant flooring distributor before a boardroom dispute forced him out in 2016. Now he runs Likewise Group, positioned to capture Headlam's business after it collapsed into administration on September 1st.

How Brewer built Headlam

Starting in 1977 as a teenager at Midlands Carpet Distributors, Brewer learned the trade from founder Graham Waldron. In 1991 they took control of Headlam and transformed it from a sprawling conglomerate into a focused flooring distributor by consolidating hundreds of small, inefficient family-owned merchants.

Headlam's golden years

Between 1991 and 2008, Headlam became one of London's best-performing stocks with operating margins near 8% and returns on capital above 20%. When the financial crisis hit, it absorbed smaller competitors and emerged controlling roughly 30% of the UK wholesale flooring market.

“Between 1991 and the 2008 financial crisis, Headlam became one of the London market's best-performing stocks”

The boardroom rupture

In 2016, Headlam's board forced out Brewer over disagreements about operational strategy and succession. After two years away, Brewer concluded that Headlam had become bureaucratic and debt-laden, with sprawling regional properties and heavy central overheads.

Likewise Group launches

In 2018, Brewer partnered with property investor Paul Bassi to launch Likewise Group on Aim. The goal was to build a modern distributor using Headlam's original lean service model without its structural deadweight.

Relationships drive the business

Flooring distribution depends on trusted sales representatives who handle 120 to 140 accounts each. Brewer recruited dozens of Headlam's sales team, regional managers and logistics directors. When they moved, many of their local customers followed.

Headlam's spiral into collapse

As Likewise captured Headlam's volume, falling sales overwhelmed its high fixed costs in depot leases and central overheads. Predictable earnings turned to losses, straining the debt facility until liquidity ran out and the company entered administration.

“In wholesale distribution, where operating margins rarely exceed mid-single digits, high fixed costs mean falling volumes can rapidly erode profits”

Likewise positioned for growth

Likewise raised 32.5 million pounds in July to build new freehold logistics facilities. The company now has significant spare capacity to absorb Headlam's stranded accounts and displaced orders with minimal extra distribution costs.

The valuation opportunity

Moving from current revenue toward Likewise's 300 million pound capacity ceiling could lift operating margins from 2.5% to 5% or 6%. At full capacity, that generates 15 to 18 million pounds in annual operating profit. The enterprise value of 100 million pounds values the shares at less than seven times mature operating profit.