TRAILBLAZERS
STOCKTURN: A VAST SPREAD 1. Browns
2. AW Lumb 3. C&W Berry 4. MGM Timber 5. MKM
6. Builder Depot 7. Beatsons 8. CRS
9. Joseph Parr
10.Parker Building Supplies 11. Kellaway
12. John A Stephens 13. EH Smith
14.Myers Building Supplies 15. Turnbull
16. Grafton Merchanting GB 17. John Nicholls 18. James Burrell 19.J T Dove 20.RGB
21. Grant & Stone 22. Frank Key 23. Elliott Bros
24. Bradford & Sons
25. UK Plumbing Supplies 26. Haldane Shiells
27. Howarth Timber Supplies 28. Lawsons 29. Markovitz
30.Covers 31. LBS
32.MP Moran 33. JT Atkinson
34.Beggs & Partners 35. Beesley & Fildes 36. Williams
37. National Timber Scotland 38. Crossling 39. Carver
40. Travis Perkins
41. Robert Price & Sons 42. James Hargreaves 43.Wolseley UK
44.Walter Tipper 45. Kent Blaxill
46. Alsford Timber 47. AW Champion
48.Huws Gray 49. Sydenhams
50. Nicholls & Clarke 51. Boys & Boden 52. Lords
53. Jewson
22.7 19.2 13.2 11.9 11.1 11.1 10.7 10.2 10.1 9.9 9.1 8.6 8.4 8.2 7.9 7.8 7.5 7.3 7.2 7.1 6.8 6.6 6.6 6.4 6.3 6.2 6.2 6.0 6.0 5.8 5.7 5.6 5.5 5.5 5.5 5.2 5.2 5.1 5.1 5.1 4.9 4.8 4.6 4.6 4.4 3.9 3.8 3.7 3.7 3.4 2.5 1.8 n/a
STOCKTURN GROWTH: MORE DOWN THAN UP 1. Grafton Merchanting GB 2. Bradford & Sons 3. Sydenhams 4. Grant & Stone 5. Turnbull 6. Browns 7. Carver
8. Williams 9. John Nicholls
10. Beesley & Fildes 11.JT Dove
12. Joseph Parr
13. John A Stephens 14. AW Champion 15. Howarth Timber 16. Elliott Bros 17. JT Atkinson 18. Boys & Boden
19. Robert Price & Sons 20. Haldane Shiells
21.Covers
22.MGM Timber
23. Nicholls & Clarke 24. Travis Perkins 25.RGB
26. Crossling
27.Parker Building Supplies 28. Alsford Timber 29. AW Lumb 30. Lawsons
31.Huws Gray 32. Kellaway
33.Walter Tipper
34.Myers Building Supplies 35. Markovitz
36. James Burrell 37.C&W Berry
38. James Hargreaves 39. LBS
40.MKM
41. Frank Key 42. Kent Blaxill
43.MP Moran
44.CRS
45. Builder Depot 46.Wolseley UK 47. EH Smith
48. UK Plumbing Supplies
49.Beggs & Partners 50. Lords
51. National Timber Group 52. Jewson 53. Beatsons
STOCKTURN
40.2 38
27.7 23.0 20.3 16.4 16.3 13.6 8.9 8.3 4.6 4.3 3.4 2.2 2.0 1.3 1.2 1.0 0.5 0.0 0.0
-0.3 -0.8 -2.0 -2.5 -3.1 -4.3 -4.6 -4.7 -5.0 -5.4 -5.7 -5.8 -5.9 -6.0 -7.5 -7.7 -8.2 -9.1 -9.2
-10.6 -11.6 -11.7 -12.1 -14.9 -15.0 -17.4 -24.6 -24.7 -81.9 n/a n/a n/a
April 2021 A supplement to builders merchants journal
Browns’ extraordinary stockturn performance is explained by a note in the group strategic report: “Our sales are split into two distinct categories, ‘direct’ and ‘depot’. Direct goods are delivered from a supplier to a site/ customer. The split in sales over the period [calendar year 2019] was approximately 71% to 29% respectively.” In other words it’s easy to achieve a terrific stockturn figure if you never actually touch the stock. Relating Brown’s stock figure to 29% of its sales rather than 100% suggests an actual stockturn figure much closer to the industry average. Overall, the main point of interest in this table is the sheer range of stockturn figures, from Brown’s 22.7 times down to Lord’s 1.8 times. It suggests that while all these companies are in pretty much the same business, they are very far from employing the same business practices. We attach a great deal of importance to stockturn as a key trading ratio, so this is one of the most important tables from our point of view. Each of the companies listed should know how and why their stockturn has improved or declined – if they don’t know, then they are potentially sacrificing a considerable trading advantage.
Take the hypothetical example of a merchant with sales of £40m and purchasing of £27m, giving a gross profit of £13m and gross margin of 32.5%. Stock is £8m, giving a stockturn of 3.4 times. If by a combination of tighter management of stock levels, and more aggressive negotiation with suppliers for ‘just in time’ deliveries, our hypothetical merchant can get the stockturn up from 3.4 times to 3.5, he will reduce the year-end stock from £8m to £7.75m, and free up a quarter of a million in working capital. Get it up to 3.6 times, and it’s half a million. That’s why we attach so much importance to stockturn.
STOCKTURN GROWTH
There are many factors that can cause stockturn to change. An acquisition or disposal could skew the figures; a corporate reorganisation might see stock being reassigned from one group entity to another; there could be a change in the ratio of direct sales to depot sales; and so on. So we don’t attach too much importance to any one company’s year-on- year change.
But stockturn is one of the key ratios in merchanting, and the broader trends are worth examining. In this year’s survey, 17 companies recorded an improvement in stockturn, against 30 which recorded a decline – two were unchanged, and in three cases the stockturn calculation was invalid because of accounting period changes. For comparison, last year the figures were 22 companies where stockturn improved, and 27 where it declined.
That may be a good sign, showing that confidence levels are high and that merchants are more relaxed about committing to higher stock levels. Alternatively it might suggest that actual sales fell somewhat short of expectations, so that some merchants ended the year carrying more stock than they had planned to. It will interesting (to say the least) to see in a year’s time what impact Brexit and the pandemic have had on the industry’s stock management.
LEAGUE TABLES
BMJ LEAGUE TABLES SPONSORED BY
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