THE DIY MARKET SUPPLEMENT 2019 TOPPS TILES: GOING COMMERCIAL
The Numbers Sales £m
Operating profi t £m Staff
13/14 14/15 15/16 16/17 17/18 %change 195.2 212.2
Gross profi t £m 118.9 129.9 18.2 18.9
Pre-tax profi t £m 16.7 17.0 1,794 1,915 45.9 51.5
Salaries £m
The Ratios Stockturn
Gross margin % Net margin % 13/14 14/15
215.0 133.2 21.1 20.0
1,977 53.8
15/16
211.8 216.9 2.4 129.4 132.4 2.4 17.9 13.7 17.0 12.7
-23.2 -25.4
2,038 2,114 3.7 50.5 54.9 8.6
2.7 3.0 3.2 2.8
Operating margin % 9.3 8.9 9.8 8.4 8.5 8.0 9.3 8.0
16/17 17/18 %change 2.8
0.2
60.9 61.2 61.9 61.1 61.1 6.3 5.9
Staff costs/turnover % 23.5 24.3 25.0 23.9 25.3 42 -0.0
-25.0 -27.1 6.1
Return on capital % 1,980.0 157.6 113.9 72.2 47.6 -34.1 DIY Week index
With sales four times greater than Tile Giant, Topps is far and away the UK’s largest tile specialist, with 364 stores nationwide. It has achieved sales growth in most recent years, and has comfortably maintained its gross margin, the highest of any company in the DIY Benchmark survey. Staff costs are rising, though, which translates into a long-term decline in operating and net margins – but nevertheless, Topps consistently delivers a very healthy return on capital. The interim report for the half to March 30 described the company’s performance as resilient in a challenging market; the key objective is to build on its entry into the commercial tile market, and as part of that it acquired the commercial and architectural tiles specialist Strata Tiles in April this year.
WICKES: UP FOR SALE AGAIN? The Numbers
Sales £m Gross profi t £m
Pre-tax profi t £m Staff
Salaries £m
The Ratios Stockturn
Operating margin % Net margin %
Staff costs/turnover Return on capital % DIY Week index
Benchmark
TRAGO MILLS: MERTHYR STORE OPENS The Numbers
Sales £m Gross profi t £m Operating profi t £m Staff
Pre-tax profi t £m 3.0 3.2 966 967 15.8 15.6
Salaries £m
The Ratios Stockturn
Operating margin % Net margin %
Staff costs/turnover Return on capital % DIY Week index
2013 2014 3.1 3.1
Gross margin % 27.2 27.6 2.1 3.3 3.6 3.9 19.2 18.8 3.6 3.9
78.9 22.0 2.0 2.4
973 15.5
2015 2.8
27.9 2.5 3.1
19.6 2.9
2013 2014 2015 2016 2017 %change 82.5 82.9 22.5 22.9 1.7 2.8
78.6 78.9 0.3 22.5 21.3 -5.5 1.7 0.4 2.1 0.8
-74.5 -62.7
977 952 -2.6 15.8 16.2 2.1
2016 2017 %change 3.1 3.2 3.5 28.7 27.0 -5.8 2.1 0.5 2.7 1.0
-74.6 -62.8
20.1 20.5 1.8 2.5 0.9 1
-62.9
Part DIY retailer, part home furnisher, part discounter, part tourist attraction, Trago Mills is one of those businesses which follows its own set of rules. Its sales have been fl at in recent years, with clear signs of pressure on margins – although the decline in gross margin in the latest year is partly the result of a decision to clear slow-moving stock through hefty discounting. The staff headcount has been reduced, but salary costs are still rising in relation to sales. Last year saw the long-awaited opening of a 200,000sq ft store with 1,200 parking spaces at Merthyr Tydfi l in south Wales, so we would expect the 2018 accounts, due by September 30, to show a signifi cant uplift in sales.
2013 2014 2015 2016 2017 %change 972.0 1,040.0 1,105.0 1,213.3 1,236.4 424.5 454.5 518.8 570.0
1.9
Operating profi t £m 50.4 69.3 60.5 65.7 49.4 68.7 60.1 65.4 5,479 5,849 5,926 7,109 143.4 157.0 166.7 191.3
2013 2014 4.2 4.2
Gross margin % 43.7 43.7 5.2 6.7 5.1 6.6 14.8 15.1 16.0 18.8
2015 4.0
47.0 5.5 5.4
15.1 14.5
539.7 -5.3 56.5 56.0
-14.0 -14.4
6,791 -4.5 185.8 -2.9
2016 2017 %change 4.3 4.6 7.2 47.0 43.7 -7.1 5.4 4.6 5.4 4.5
-15.6 -16.0
15.8 15.0 -4.7 20.7 21.6 4.6 40
Owing to Homebase’s problems over the past few years, Wickes is now the UK’s second largest DIY retail chain after B&Q. That’s likely to remain the case: its fi ve-year growth pattern is stronger than Topps, Argos, Dyas, Wilkinson, B&Q, and of course Homebase. Its stockturn and gross margin are consistently among the highest in the sector, and it delivers a reliable double-digit return on capital, year after year. Travis Perkins attracted criticism after it bought Wickes from the now-defunct Focus group for £950m in 2004, but over time it looks to have been a good investment – an investment which may pay further dividends if TP follows up on its recent announcement that it is planning to sell the chain.
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WILKINSON: NEW DIGITAL COMPANY The Numbers
Sales £m Gross profi t £m
14/15 15/16 16/17 17/18 18/19 %change 1,444.6 1,464.5 1,512.8 1,619.1 1,558.0 -3.8 578.4 590.1 607.4 629.2 620.7 -1.3
Operating profi t £m 2.9 23.6 18.0 8.2 -15.0 n/a Pre-tax profi t £m Staff
22.5 26.0 5.2 -62.6 10.4 Salaries £m
The Ratios Stockturn
Operating margin % Net margin %
n/a
21,243 20,830 21,054 20,705 19,637 -5.2 270.5 266.6 277.7 283.3 253.9 -10.4
14/15 15/16 5.6 5.8
Gross margin % 40.0 40.3 0.2
1.6 1.6 1.8
Staff costs/turnover % 18.7 18.2 Return on capital % DIY Week index
16/17 5.7
40.2 1.2 0.3
18.4 15.0 14.2 3.5
17/18 18/19 %change 6.0 5.9
-1.1
38.9 39.8 2.5 0.5
-1.0 n/a
-3.9 0.7 n/a 17.5 16.3 -6.9 -61.6 10.9 -21
-117.6
Wilkinson saw a downturn in 2018/19 after years of growth. It must have been aff ected by the success of The Range, B&M and Home Bargains, but they are mostly out of town whereas Wilko still holds sway on the high street. Gross margin and stockturn held up well – Wilko has always been a stockturn star – and the focus on cost control has seen a steady and signifi cant reduction in headcount and salaries. A recent corporate restructuring saw the creation of a separate company, Wilko Digital, to oversee online business – it recorded sales of £49m in 18/19. On the bricks and mortar side, Wilko opened eight new stores, and closed seven during the year, and continued to focus on developing its own brands.
DIY WEEK THE DIY MARKET SUPPLEMENT 23
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