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Howdens reports robust Q3 update

Howdens

Howden Joinery Group Plc has this week announced a trading update for 16 June 2019 to 2 November 2019 (Period 7 to Period 11).

Trading

Howdens has delivered a robust trading performance, including the important October/November trading period (Period 11), against a strong comparator for the same periods last year.

Howdens UK depots’ total revenue for Periods 7 to 11 increased by 4.9% and by 2.0% on a same depot basis, on the comparable Periods in 2018, with gross margin during Periods 7 to 11 being in line with management expectations.

The Company remains on track to meet the Board’s expectations for sales and profits for the full year.

Business developments

Howdens expects to open a total of around 40 depots in the UK in 2019, including five in Northern Ireland, taking the total number of depots in the UK to around 734. Five new depots are also expected to be opened in France.

Howdens has acquired 1.7m shares since July 2019, and a total of 10.8m shares in 2019 to date, at a cost of £55.2m. As a result, we have completed the £60m buyback programme that was announced in February 2018 and half of the £50m programme announced on 28 February 2019.

Commentary & Analysis – Steve Collinge

Overall the Q3 numbers are robust, bearing in mind recent profit warnings from Grafton Group and general concern within the construction industry. At this stage, the company is on track to meet the Board’s expectations for the full year. In Q3, the UK business delivered +4.9% sales growth and +2% on a like for like depot basis. This performance aligns with commentary from other merchants that market conditions have become incrementally more challenging in recent months. Gross margins in the period were also in line with management expectations. The store expansion trail continues with the group due to open 40 depots in the UK and five in France in 2019. This is still the only business in the Home Improvement sector that I would personally invest in.

Next scheduled announcement

The Group will release its 2019 Preliminary Results on 27 February 2020.

Source : Insight DIY Team and Howdens


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