Safestyle UK appear to be in a rather sticky spot of bother. Ever since their latest trading update, which delivered a significant downgrade on expectations and notification of job losses, their share price has taken a dive.

Although the share price of the company has been significantly lower since their all-time-highs in 2017, the last few weeks has seen any remaining value in those shares wiped out.

So what happens now?

Safestyle downgrade caused harm

It’s clear that revised expectations delivered in the latest trading update did not instil confidence. The share price of the company has been in a steady decline for a while, but these charts explain well just how far the company has slipped since their highs in 2017:

September 14th 2023:

All time performance:

That is a dramatically steep drop. It is worth remembering that the company has had a rough period which has lasted quite some time. Not only did it have to navigate COVID just like the rest of the industry, and then the following supply chain crises and hyper-inflation, but only a few years before the company was nearly wiped out by the ultra-aggressive tactics of new rival Safeglaze.

Although the company enjoyed relative stability during the boom that followed the first lockdown during COVID, the share price has not responded to it. One thing that followers of business news should also note is the volume of shares that traded today. Namely more than 1,200,000 of them. One of the highest daily trading volumes for a few years. Maybe it’s something, maybe it’s nothing.

In their latest trading update, they made specific mention of deteriorating trading conditions going into August. This sort of specific guidance is not something you always see in a trading update, but is perhaps laying the groundwork in advance of more disappointing figures ahead of time. Again, not helpful for the share price.

What could all this mean?

When I speak to my contacts on social media, which tend to be smaller installers, some still report decent performance this year. Not breaking records, but doing better than others. I would like to think that is because these companies are proactive, energetic and can see future trends and opportunities sooner than most. And the fact that smaller companies are able to pivot more easily and swiftly than bigger companies who rely on volume business models and where enacting change can take a long time.

The latter is where Safestyle lies. They are a volume-based business. They need strong, solid numbers at all times to keep the engine running. However, 2023 has not been that year. I have seen estimates ranging between 10% – 30% in drops for the sector compared to previous years. Some I have been told are below pre-pandemic levels. This is a painful drop for any volume-based installer. I suspect traders have taken both the medium-term outlook and downgraded trading update and decided that H2 isn’t going to be any better than H1.

Although share prices are not the full story for a company, it is a good indicator of the quality and health of a company. In the case of Safestyle, the value of their shares has dropped an whopping 93% from their highs to where they are today. In any other part of the economy, for example banking and finance or retail, we would be counting the days until that distressed company would be shuttered. I am sure we will remember the banking crisis in the Spring which saw a number of US regional banks go bust, and a bit further back to 2008 and 2007 when the Great Financial Crisis saw banks and other institutions saw their share prices plummet.

There is no question that a turnaround looks needed at the company. Their latest trading update was not good, and that news is being reflected in the share price. They have forecasted a poor H2 as well, but they are going to have to put in place some measures to either rapidly boost sales or alter the size and shape of the business to restore some confidence in the business.

Find out more about Safestyle UK’s share price here:

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