Benchmark
2019 THE WHOLESALE MARKET SUPPLEMENT
RETURN ON CAPITAL: A HEALTHY AVERAGE
5-year average
1. Newton Hale 2. Toolbank
3. North West Tools 4. Aldridge 5. EFG
6. Bromborough 7. Decco
8. Handy Distribution
Latest -1 -2 -3 year year year year
58.7% 76.7% 20.0% 20.9% 17.6% 11.5% 17.1%
15.2% 16.4% 13.2% 10.0%
94.4% 22.3% 21.0%
-4 year
92.5% 37.8% -7.8% 21.6% 17.7% 17.6% 18.2% 17.7% 19.5%
5.4% 4.4% 5.9% 53.3% 16.4% 11.4% 11.2%
21.0% 24.6% 2.4% 20.3% 13.3% 11.4%
13.0% 9.2% 12.8% 8.7% 17.1% 17.4% 11.8%
5.2% 2.3% -4.1% 5.2% 10.7% 12.1% 1.0%
-31.5% -42.8% -39.3% -80.1%
4.4% -4.0% 10.1% -11.0% 5.6% 0.3%
4.6% 5.1% 9.7% 6.7% 19.1% 18.2%
9. Home Hardware SouthWest 11.8% -0.7% 4.8% 12.2% 22.3% 20.2% 10. Home Hardware Scotland 11. Stax Trade Centres 12. Harrison & Clough
Source: DIY Week analysis of fi led company accounts N
ewton Hale’s massive return on capital is largely a refl ection of its very modest capitalisation. Apart from that, the middle
ground shows what a solid business hardware wholesaling can be: eight of the 12 companies listed regularly deliver very respectable returns, and mostly in double digits. The major investment that Stax made in its Scottish business means that its return on capital in the past few years understates the business’s strength; and of the 12 companies listed, Harrison & Clough is the only one that looks to be in real diffi culties. Another way of looking at the sector’s performance is to consider the average ROC achieved collectively by the 12 companies over fi ve years: a very solid 12.8%. Broken down by year, that’s 9.9% in the latest year, and 12.1%, 11.9%, 18.6% and 11.5% in the years before that. If we leave Harrison & Clough out of the equation and look at the yearly collective average for the remaining 11 companies, the fi gures (reading back from the latest year) are 14.6%, 16.7%, 20.2%, 20.2% and 12.1%. And the fi ve-year average for the 11 companies is 16.8%. That’s very healthy indeed.
DIY WEEK INDEX: THE OVERALL VIEW
5-year 1. EFG
2. Newton Hale 3. Toolbank
4. Bromborough
5. North West Tools 6. Aldridge 7. Decco
8. Home Hardware SouthWest 9. Stax Trade Centres
10. Home Hardware Scotland 11. Handy Distribution 12. Harrison & Clough
average 860
Latest -1 -2 -3 year year year year
704 1,092 1,925
3,184 -531 1,556 83 294
222 -4
year 7
-15
268 -9 580 203 340 225 194 209 154 186 267 151 186 -53 212 90 465 218 179 49 53 -18 46 4 -311 124 30 14 5
-0
14 -4
-11 30
706 106 381 100
32 29
-23 -10 -100 -102 -131 -21 -115 -528
Source: DIY Week analysis of fi led company accounts
-2 31 52 -22 -1 -8 16 21 281 5
-183 4
D
IY Week’s Index is intended to give an overall view of a company’s general effi ciency and competitiveness, and is calculated by multiplying
what we have always considered to be the three fundamental trading ratios: sales growth, stockturn, and operating margin. So if (for example) a company’s year-on-year sales were up by 2.5%, its stockturn was 6.2 times and its operating margin was 7.3%, the DIY Week Index score would be 2.5 x 6.2 x 7.3 = 113. A sales decline or a negative operating margin, no matter how small, would automatically produce a negative Index score. EFG Housewares heads the table this year, although its recent fi gures are unreliable – the company changed its accounting period in 2016, so that year was only 35 weeks. Newton Hale’s considerable sales growth projects it into second place in the table (although there is an indication that this growth, at least in the latest year, has been achieved at the expense of a signifi cant drop in margin); and it is followed by a number of companies which record consistently healthy Index scores: Toolbank, Bromborough, North West Tools, and Aldridge.
12 DIY WEEK WHOLESALE MARKET SUPPLEMENT
www.diyweek.net
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