Benchmark 1. Al Murad


2. Gardiner Haskins 3. Home Bargains 4. The Range 5. B&M


6. Topps Tiles 7. Screwfi x


8. Toolstation 9. Wickes


10. Charlies Stores 11. Trago Mills 12. Axminster 13. Taskers 14. B&Q


15. Robert Dyas 16. Wilkinson 17. Tile Giant 18. Argos


19. Homebase 20. Leekes


5yr average 15.7%


9.7% 9.3% 9.0% 8.9% 8.6% 8.6% 7.2% 5.5% 4.0% 2.1% 2.0% 1.3% 1.2% 0.7% 0.5% 0.4% -0.7%


-13.6% n/a


Source: DIY Week analysis of fi led company accounts O


perating margin is one of DIY Week’s key ratios; it gives a clear idea of how well a business is performing. In Al Murad’s case,


spectacularly well – its fi ve-year average operating margin of 15.7% is far ahead of any other retailer covered by this survey. And it may well be connected to the fact that Al Murad also has one of the lowest salary bills in the industry, as the next table makes clear. As well as big numbers, what we look


for here is consistency, because as always it isn’t just about doing things well once in a while – it’s about doing things well year after year. In this respect we would single out Home Bargains, with a fi ve-year record of 9.7%, 10.0%, 8.5%, 9.0% and 9.4%. B&M looks good too: 8.2%, 9.9%, 8.8%, 8.8% and 9.0%. But the star performer in terms of consistently growing the operating margin has to


12 DIY WEEK THE DIY MARKET SUPPLEMENT


be Screwfi x: 6.8%, 7.4%, 8.5%, 9.0% and 11.1%. There are some less impressive performers too. Gardiner Homecare’s operating margin peaked at 11.8% three years ago, but was down to 6.4% in the latest year. Taskers has gone from 5.3% to -5.4%; Wilko from 1.6% to -1.0%; Tile Giant from 2.3% to -1.0%; Argos from 2.1% to -3.1%; and Homebase, to nobody’s surprise, from 3.1% to -61.2%. A decline in operating margin, however, may not refl ect worsening trading conditions, but may be the result of a decision to invest in refurbishment, expansion or


restructuring. Taskers,


for instance, incurred just over £1m of exceptional costs in the latest accounts, following the decision to close three stores and restructure the company. Without those exceptional costs, the operating loss would have been £54,000, and the operating margin would have been -0.3% instead of -5.4%. And as


the company makes clear, the reason for the move was to focus on growth areas, strip out loss-making product categories, and to improve effi ciency and reduce costs.


Another factor is that many of the companies listed here are privately owned, and owner-managed. If the owners decide that taking a loss in one year is the right thing to do, they don’t have to justify their decision to shareholders or city analysts, and they don’t have to worry about the possible impact on the share price for the simple reason that there isn’t one. Finally, and to clear up the obvious


query, we haven’t included a fi ve-year average operating margin for Leekes because the company incurred a £2.66m revaluation loss in the latest accounts, following the decision to close its Coventry store. The resulting operating margin of -2,937% in that year would have made a nonsense of the average.


www.diyweek.net


Latest year 17.9%


2019 THE DIY MARKET SUPPLEMENT


OPERATING MARGIN: AL MURAD FAR AHEAD


- 1 year -2 years - 3 years


6.2% 8.4% 11.8% 11.7% 9.4% 6.3% 9.0% 6.3%


9.0% 9.0%


8.5% 10.0% 9.8% 10.2%


11.1% 7.2% 4.6% 3.4% 0.5% 1.2% -5.4% 3.2% -0.6% -1.0% -1.0%


-61.2% n/a


-4 years


16.8% 16.0% 18.9% 8.9% 10.4% 9.7% 9.7% 8.2% 9.3% 6.8% 6.3% 5.2% 3.4% 2.1% 5.8% 1.9% 3.2%


8.8% 8.8% 9.9% 8.4% 9.8% 8.9% 9.0% 8.5% 7.4% 7.3% 7.6% 7.8% 5.4% 5.5% 6.7% 3.6% 5.3% 4.3% 2.1% 2.5% 3.3% -2.0% 3.5% 1.3% 1.3% 3.4% 5.3% 3.9% -4.0% -0.5% 0.6%


-1.7% -3.1% -0.0%


0.5% 1.2% 1.6% -3.0% 1.9% 1.7% -3.9%


2.1% 2.0%


-10.1% 3.1% 1.2% 0.8%


0.3%


1.2% 4.2% 0.2% 2.3% 1.6% -1.0% -3.3%


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