Victoria PLC, Balta, & Flooring Manufacturing

In Practise Weekly Analysis

Founded in 1895 and listed in 1963, Victoria (VCP) is a manufacturer and distributor of carpets and ceramic tiles throughout Europe and the UK. The company was founded as a carpet manufacturer supplying mid to high-end residential properties and even the British Royal Family. VCP’s performance as a public company was lackluster; in 1989, operating profit was ~£3m and still only ~£2m over two decades later.In 2012, the direction of the company changed when the great-grandson of Victoria’s founder and Geoff Wilding, former banker and CEO of two prior roll-ups, plotted to overthrow the CEO and half the board. There are many details and different stories of how Wilding took control of VCP. In short, Wilding’s consortium overthrew management and he was incentivised with a complex CFD that, upon returning roughly the market cap in dividends within 2 years, awarded him with ~50% of VCP’s shares outstanding.Ten years later, Wilding is still Executive Chairman of VCP and owns 20% of the equity. His performance has been so impressive that VCP’s investor relations website updates automatically to calculate Wilding’s performance since taking over: VCP’s performance plus the fact Berkshire owns Shaw Industries, one of the largest flooring manufacturers in the US, piqued our interest in the industry. We recently published our first interview on VCP with a Former Balta Director that has 50 years experience in the flooring industry and plan to cover Victoria going forward. Wilding often quotes Buffett as if two like-minded capital allocators noticed the attractive attributes of the flooring business. The industry is resilient with 85% of revenue from renovations and only 15% from new construction. Although renovation spend is driven by house prices and consumer confidence, the relative size of the renovation market to new builds dampens cyclicality for manufacturers.
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