Victoria Shares Plunge as Weak Demand Forces Guidance Cut

Victoria PLC (LSE: VCP), the international flooring designer and manufacturer, saw its shares plummet 12.3% following a trading update that lowered expectations for FY2026.

The revised outlook stems from weaker consumer confidence and reduced footfall at its end customers, attributed to geopolitical events impacting key markets in Western Europe, North America, and the UK.

The company now anticipates post-IFRS16 EBITDA to be approximately £95 million for the full fiscal year. This is a significant reduction compared to prior market expectations, which had revenue pegged at £1064 million and post-IFRS16 EBITDA at £110.7 million.

Year-to-date trading showed some improvement in Q3, with revenue declining by approximately 3% compared to a 7% decline in the first half of the year.

However, lower shipment volumes in the Rugs business, due to the manufacturing transition from Belgium to Turkey, accounted for over half of the Q3 revenue decline. Gains in UK Carpets market share and strong performance in Australia partially offset this. Excluding Rugs, year-on-year revenue declined by roughly 1.5% in Q3.

The first half of January witnessed a sharp drop due to the factors mentioned previously. While trading has shown signs of recovery in recent weeks, the board anticipates Q4 revenue to fall below previous expectations and be approximately 5% lower than FY25.

Management remains focused on delivering EBITDA improvement initiatives within its control. Key initiatives include the launch of the new V4 ceramics line in Spain, expected to drive growth and improved EBITDA in the Spanish ceramics business through FY27 and beyond.

The relocation of Rugs manufacturing to Turkey is progressing, but shipping disruptions have been greater than anticipated. Integration of the UK Underlay and Australian businesses is also expected to be completed by the end of March.

While a lower starting point on volume will reduce the outlook for 2027, the currently disclosed EBITDA improvement initiatives remain on track, and further EBITDA improvements have been identified across the divisions. These will be quantified as part of the ongoing budget process. The company is implementing increased rigor in tracking these improvements, along with broader governance enhancements.

Victoria PLC is also focused on strengthening its capital structure and is engaging with its capital providers to progress refinancing plans, including addressing its 2028 senior secured notes.

Cash initiatives outlined at the half-year results are advancing, with targeted property sales progressing well and additional potential property sales identified. New processes to reduce overdue receivables and inventory are also showing improvements. Divisions are also engaging with suppliers to improve payables terms.