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UK carpet seller Headlam ups prices after post-Brexit sterling weakness

LONDON (Reuters) - British carpet distributor Headlam (HEAD.L) has raised its prices after a weaker pound in the wake of the Brexit vote pushed up the cost of imports from continental Europe, showing the potential inflationary impact of sterling's decline.

Headlam, which supplies independent floorcovering retailers and contractors, said August is traditionally one of its peak trading months in Britain thanks to the annual summer refurbishment of schools and colleges.

"To date, this seasonal business seems to have been unaffected by the result of June's referendum on EU membership," said Chief Executive Tony Brewer.

"However, the referendum result gave rise to a weakening in sterling, and the group has sought to mitigate this adverse inflationary effect by implementing price increases earlier this month for residential floorcoverings imported from continental Europe."

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Brewer said the price increases, which averaged 6 percent, appeared to have had no adverse impact on residential revenues to date.

"Our market appears to be robust and, subject to the key trading period in the run-up to Christmas, the board remains confident of achieving full year expectations," he said.

Two months after Britain decided to leave the European Union, consumers seem to have taken the result in their stride but there are some signs that the challenge for the economy has barely begun.

For the six months to June 30 Headlam reported a pretax profit of 15 million pounds, up 22 percent, on revenue of 329 million pounds, up 4.8 percent. The interim dividend was raised 11.7 percent to 6.7 pence.

Its shares were up 3.5 percent at 462 pence at 0802 GMT, valuing the business at 390 million pounds.

(Reporting by James Davey)