Howden Joinery impresses despite shaved profits
Howden Joinery hoisted sales in the first half of the year but the retailer's profits were whittled down as it increased investment and pension costs.
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Interim results for the 24 weeks to 10 June saw group sales grow 4.6% year on year to £553m, with like-for-like sales in UK depots growing 2.4%.
Gross profit margin shrank slightly to 64.1% from 64.5%, with operating profit declining to £66.6m from £74.7m due to product and plant investments, pension contribution costs and currency movements that management had previously flagged and came as expected.
Earnings per share dropped to 8.4p from 9.1p, as expected, while the interim dividend was nudged up to 3.6p per share from 3.3p a year ago.
Chief executive Matthew Ingle, who earlier this month announced he will retire next year, called it a "solid" revenue performance that was in line with full year plans.
He pointed to the success of sales initiatives kicked off at the end of the prior financial year, with UK growth of 4.0% year-on-year in the half 2017 and revealed that growth had accelerated to 6.5% for the first four weeks of the second half.
"We continue to develop the range of products and services we offer to broaden the entry-level appeal of the Howdens' proposition. Our investment programme remains on track and we have begun operations in our new distribution centre in Raunds, Northamptonshire.
"We believe that current market conditions are stable, although we remain watchful given continuing economic uncertainties."
Overall expectations for the full year are unchanged, though Ingle continues to anticipate further foreign exchange costs of roughly £20m and operating costs of around £20m in total due to pension costs, new product introductions, the new distribution centre and additional depreciation, plus ongoing additional costs from inflationary pressures in both costs of goods sold and SD&A.
Capital expenditure is still nailed on for around £65m in 2017 and management are likely to continue investing in growth next year "given the opportunities we see ahead".
It was noted that the 2017 financial year will include a 53rd week, which will increase operating costs by around £10m, but will not contribute to revenue.