Nostalgia for British interiors spurs furnishing revival

Soft furnishings has often been a hard industry.

But the Downton Abbey effect and nostalgia for a lost British era continue to lift many UK interior design businesses, helped by a gradual return of consumer confidence.

Walker Greenbank, the Aim-quoted maker of upmarket wall and window coverings, has benefited more than most. Its shares have more than doubled since 2012.

It has invested heavily in manufacturing facilities and new digital printing machines - spending more than £9m since 2010.

But that expenditure should tail off over the next three years, says John Sach, chief executive, and the investment is already paying off in higher profits.

Other British interiors groups have also improved. Shares in Laura Ashley, known for its sprigged cotton designs, have risen by a third in three years, while shares in Colefax, another fabrics group, are up two-thirds.

A quarter of a century ago there were close to 40 manufacturers of furnishing fabrics and wallpapers in the UK. But a taste for minimalism and the age of beige took hold, forcing mills across Britain to close down.

By 2000 even businesses representing the quintessential English country house look - such as Colefax and Osborne & Little - had moved production to France, Italy, Belgium or Asia.

Laura Ashley stopped making its own fabrics about 15 years ago, keeping just a Welsh facility to make wallpapers and bespoke curtains.

Walker Greenbank became about the last remaining manufacturer of printed wallcoverings and textiles of size in the UK.

"There wasn't a grandmaster plan to keep manufacturing," says Mr Sach, who has run the company for 11 years.

The business was in such dire straits that it could not afford to close the manufacturing side down, he admits. Walker Greenbank has only just used up the £24m in tax losses it accrued between 1998 and 2004 and only resumed paying a dividend five years ago

But retaining manufacturing plants in Britain - which was deemed a disadvantage a decade ago - has been turned to its advantage, says Mr Sach. Production costs in the UK have fallen, while those in emerging markets have risen. At the same time, Walker Greenbank is manufacturing other companies' brands, which has provided an extra income stream, spread its costs, and helped to maintain margins.

Its Lancashire and Leicestershire mills now roll out its own Zoffany, Morris, Sanderson and Harlequin printed papers and fabrics as well as other brands - including lines for Burberry, Liberty, Osborne & Little and Colefax.

Manufacturing profits were up by a fifth to £3.7m in the year to January, accounting for nearly half of group profits, after stripping out a £1m charge for a long-term incentive plan for the management.

Walker Greenbank is also reaping the benefits of its brands being upmarket but not too rarefied.

By contrast, Laura Ashley, which has a more price conscious mid-market customer base, unveiled a 1.5 per cent drop in sales from its decorating division in the year to the end of January. And at the top end, Colefax's first-half revenues were down 4 per cent to £37m to October 2014, largely through currency weakness on non-UK sales.

Still, many of the clouds that shadow Colefax also hang over Walker Greenbank. Colefax is concerned about the effects on UK sales of this week's election, with the possibility of a new mansion tax proposed by Labour compounding the effect of higher stamp duty on the upper end of the UK housing market.

West End interior designers fret, too, about how political and economic difficulties in Russia and Ukraine could affect business in eastern Europe and London. Walker Greenback, which last year launched its Anthology brand - described by Mr Sach as "glitzy"- specifically to appeal to Russian and Chinese buyers, could suffer as much as any.

The company thinks it has something its rivals lack - an expanding manufacturing base that will make it more resilient over the long term.

Having tasted the group's recovery, investors will hope it is now only Walker Greenbank's fabrics that reflect a bygone era - and not its performance.

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation