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Benchmark


MILLBROOK: SMALL IS BEAUTIFUL The Numbers


Sales £m Gross profi t £m


5.7 2.6


6.2 3.1


6.8 3.3


7.0 3.6


Operating profi t £k -86 Pre-tax profi t £k Staff


-153 Salaries £m


The Ratios Stockturn


Gross margin %


116 133 140 151 155 1.5


1.7 4.2 1.9 4.1 2.0 2.1 4.6 -3.2 -1.5


2.7 1.8


3.4 4.2


2018 THE GARDEN MARKET SUPPLEMENT NOTTCUTS: MASSIVE PROFIT GROWTH


12/13 13/14 14/15 15/16 16/17 %change 4.8 2.3


3.1 10.2


-22 69 181 314 73.5 -88


8 123 261 112.2 2.6 3.3


12/13 13/14 14/15 15/16 16/17 %change 4.5


-6.8


Operating margin % -1.8 -0.4 Net margin %


46.8 46.2 49.4 48.6 52.0 1.1 0.1


Staff costs/turnover % 32.0 29.2 29.8 29.3 29.3 Return on capital % -4.5 -2.7 DIY Week index


0.2 97.8 -30.9 38.8 114.8 59.6


One of the smallest businesses covered by Benchmark, Millbrook operates three garden centres in the south-east corner of England. Sales have grown substantially following the acquisition in 2013 of the third centre in Staplehurst, and the sales fi gure in the latest accounts is nearly 50% higher than fi ve years ago. Profi tability has recovered strongly too – net profi t more than doubled in the latest fi nancial period – and Millbrook manages to maintain both a competitive gross margin and a competitive stockturn fi gure, which isn’t the case for all companies covered by this survey. Staff costs as a percentage of sales are a little higher than the industry average, but given the company’s overall performance we don’t see this as a cause for concern.


PLANTERS: SOLID TRADING RATIOS The Numbers


Sales £m Gross profi t £m


Operating profi t £k Pre-tax profi t £k Staff


Salaries £m


The Ratios Stockturn


Gross margin %


8.4 3.8


6.9 3.3


6.0 3.0


6.1 3.1


43 443 258 311 344 363 389 300 252 295 184 187 164 149 155 1.8


1.9 2.6 1.6 2.7 4.4


3.7 4.3


8.8 1.5 3.4


5.2 4.2


7.0 1.5 6.8


4.5 68.2 3.7 105.7 0.1


7.0 103.1


The Numbers Sales £m


Gross profi t £m


12/13 13/14 14/15 15/16 16/17 %change 53.8 55.9 63.7 67.8 71.3 28.0 28.5 32.1 32.3 34.2


5.3 5.9


Operating profi t £k 1,690 322 1,079 1,291 1,686 Pre-tax profi t £k Staff


Salaries £m


The Ratios Stockturn


Gross margin % 30.6


2,744 1,169 6,780 3,090 6,244 102.1 1,143 1,130 1,228 1,238 1,312 14.1 14.5 16.0 16.3 17.6


6.0 7.9


12/13 13/14 14/15 15/16 16/17 %change 2.4


2.5


Operating margin % 3.1 Net margin %


5.1 8.2 2.9 1.7 3.3 2.1 10.6 3.5 23.8


1.9 4.6


3.4


52.0 51.1 50.4 47.6 47.9 0.6


2.4 8.8


Staff costs/turnover % 28.4 25.2 22.8 23.6 22.9 Return on capital % DIY Week index


9.5 16.7 -54.0 5.6 69.6 40.8 42.2


Notcutts was for some years Britain’s third largest garden centre operator behind Wyevale and Dobbies, but it has now been overtaken by Blue Diamond and thus relegated to fourth place. This is despite the fact that its sales have grown strongly, up 32% over the past fi ve years. It has seen massive profi ts growth, too, with net profi t up from £2.7m fi ve years ago to more than £6.2m in the latest period. The gross margin looks to have come under a little pressure in the past couple of years, and the stockturn is on the slow side; but on the credit side, the staff costs are lower than average, and the return on capital is very healthy. As with pretty much all the garden centre businesses listed in Benchmark, Notcutts looks like a very well-managed company.


12/13 13/14 14/15 15/16 16/17 %change 8.3 3.6


3.1 3.3


10.6 17.1 4.0 1.3


12/13 13/14 14/15 15/16 16/17 %change 2.6


Operating margin % 0.5 Net margin %


43.3 45.0 47.6 49.7 49.8 5.3 4.6


5.6


Staff costs/turnover % 22.1 22.0 22.8 25.6 25.2 Return on capital % 16.0 15.2 DIY Week index


8.2 11.4 -171.0 -252.4 47.4


What looks like a serious decline in sales at Planters in 2015 is apparently the result of a reorganisation: the Every Occasion card shop chain, previously treated as part of the garden centre business, was spun off as a standalone business within the same holding company. The fi gures since then refl ect the performance of the two garden centre: Planters at Tamworth and Garden King at Swadlincote. The ratios look solid: gross margin, operating margin and net margin are all competitive, the return on capital is strong, and the staff costs are below average. Stockturn is a little slower than average, but that’s the only aspect of the business that appears to be off the pace.


20 DIY WEEK GARDEN MARKET SUPPLEMENT


2.7 -18.6 0.2 7.3


4.8 13.6 -1.7


7.8 10.4


POLHILL: GREAT RETURN ON CAPITAL The Numbers


Sales £m Gross profi t £m 4.8 4.9 5.1 5.1


Operating profi t £k 755 540 695 767 796 Pre-tax profi t £k Staff


Salaries £m


The Ratios Stockturn


Gross margin %


Operating margin % Net margin %


2.6 2.7 2.8


1.9 0.6


24.1 92.0 -3.1 75.5


2012 2013 2014 2015 2016 %change 10.6 10.6 10.7 11.2 10.8 4.9


686 458 620 694 726 181 185 177 177 185 2.5


6.4


5.1 4.3


5.9


6.5 5.8


5.4


6.9 6.2


2.9


-3.2 -0.1 3.8 4.6 4.5 6.0


2012 2013 2014 2015 2016 %change 5.5


45.9 45.4 45.9 45.5 46.9 7.1 6.5


7.4 6.7


Staff costs/turnover % 24.0 24.4 24.8 24.6 27.0 Return on capital % DIY Week index


-12.8


6.5 21.2 3.2 7.2 8.1 9.5


27.2 20.8 27.9 30.2 38.2 26.6 6.8 12.6 28.6 -13.5


Polhill is a family-owned business, positioned very much as a destination centre, and located just off the M25. It seems to have reach a plateau in terms of sales: although turnover grew modestly between 2012 and 2015, it fell back again in 2016. The gross margin is slightly below average for the sector, too. But that’s all the bad news; on the credit side, Polhill keeps its staff costs lower than average, it consistently produces an operating margin well above the average, it has the fi fth highest stockturn of the 26 businesses covered by Benchmark – and fi nally it produces the second highest return on capital, beaten only by Woodcote Green. So overall, there doesn’t seem to be a lot for the Novell family to worry about.


www.diyweek.net


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