March 21, 2019 / 9:28 AM / 4 months ago

Safestyle sees return to profit in 2019 after posting larger FY loss

(Reuters) - British windows and doors retailer Safestyle UK Plc said on Thursday it expects to return to profitability in 2019, after it posted a larger-than-expected full year pretax loss, hurt by legal costs as it battled a rival and increased labor expenses for contract workers.

The company is trying to move past a tough year after setting a plan to stabilize its business.

Safetyle reported an underlying pretax loss of 8.7 million pounds ($11.50 million) for the year ended Dec. 31, higher than the expected range between 8.2 million pounds and 8.6 million pounds.

Revenue fell 27 percent to 116.4 million pounds and gross margin fell 10 percent.

The Bradford-based retailer, which sells PVC windows and doors to the home improvement market, sees a better 2019 following a year of legal wrangling and fierce competition from rival Safeglaze.

Safestyle had said all areas of its operation were being hurt by Safeglaze’s entry into the market.

Last March, Safestyle sued Safeglaze, which has been eating into Safestyle’s market share. The companies settled and Safetyle signed a five year agreement with the co-founder of Safeglaze.

“This event, combined with a backdrop of a challenging consumer environment, resulted in a severe decline in our financial performance in the year,” Safestyle said.

In December, it had forecast a bigger loss for the year as it ramped up spending to hire contract workers.

However, it expects to return to profitability in 2019. Safestyle said that following the settlement it quickly began investing to prop up its business, adding that its order intake for the final two months of 2018 saw improvement compared to most of 2018.

($1 = 0.7566 pounds)

Reporting by Sangameswaran S in Bengaluru; Editing by Bernard Orr

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