The group behind emerging mattress and bed base retailer Memory Foam Warehouse says it has re-engineered its product line and cost base to reverse 2013–14 trading losses.

Wakefield based GNG Group — which runs the MFW business — said its retail arm struggled to maintain margins as its top line grew rapidly in the year to end June.

Consolidated group sales rose 19 per cent to £13m, but the vertically-integrated group lost £243k at the pre-tax line, down from earnings of £68k in 2012–13.

Gross margin across the group weakened 200 basis points to 42.6 per cent while admin costs as a proportion of revenue increased 20 basis points to 34.2 per cent.

Privately owned GNG — which owns the Komfi beds supply business as well its own foam conversion operation — said other group divisions were profitable but lacked the scale to make up for losses incurred by MFW.

GNG said the second half of the year (Jan–Jun) saw it complete a major product re-engineering and costing exercise across the whole business, resulting in new, more cost-effective, ranges being introduced to replace non-competitive lines.

It now has much clearer objectives and a profitable platform to build on for the future, it said, adding that its smaller businesses needed to grow in order to offset its reliance on MFW.