Howdens to repay £22m in furlough money after profits rise

Howdens has said it intends to repay the Government and local councils £30 million for waived business rates and furlough payments after a strong trading period.

Between June 14 and October 31 (Period 7 to Period 11), total revenue increased by 12.3% and by 10.1% on the same-depot basis, on Periods 7 to 11 in 2019. Gross margin was ahead of the first half of 2020, but lower than the same period in 2019.

Howdens did see some disruption caused by the first lockdown (group revenue down 28.7% from £652.6 million in H1 2019 to £465m in H1 2020 and gross profit down by 31.8% to £276.1m). By June, however, all depots were open, and by Period 7, UK sales were 2.2% ahead of Period 7 sales in 2019.

Howdens is set to repay £22m million in furlough payments by the end of 2020.

Howdens has not made any claims for the Government’s Job Retention Scheme in the second half of the year and does not expect to make any further claims. The company is also confident that there will be no significant disruptions within the business as a result of Covid-19.

There will also be around £8m to be repaid to local councils from waived business rates. Any other deferred payments, taxes and pension deficit contributions will also be paid by the end of the year. The board will consider recommencing payments of dividends with the announcement of Howdens 2020 full-year results in February 2021.

The total UK revenue for the year to date (Periods 1 to 11) was 6.8% less than in 2019. Howdens has extended its “P11” sale period across Periods 10 and 11 this year to help with stock and demand.

In 2020, it opened 15 new depots opened, bringing the total to around 747 and 30 depots have been recently refurbished into the updated format. There will also be four new depots to open in France.

Andrew Livingston, chief executive of Howdens, said: “I am very pleased with Howdens trading performance in the second half to date with sales in Periods 7 to 11 being particularly strong.

“Covid-19 has had a significant impact on all of our lives, and Howdens’s priority remains ensuring that our employees and customers are safe and supported. We have also found new ways of working so that we can manufacture safely in a socially distanced environment and, together with our suppliers, ensure stock availability to support customer needs.

“With our autumn peak trading period concluded, we are progressing our business initiatives, including depot opening and reformatting programmes, new product introductions and digital developments. We remain confident in our business model, which is founded on strong customer relationships and having product in-stock locally. However, we remain cautious about the immediate outlook in these very uncertain times.”

Across the channel, Howdens’s French and Belgian depots’ total revenue for Periods 7 to 11 increased by 33.3% and by 25.4% on a same-depot basis, on the comparable Periods in 2019. Total revenue for the year to date was 7.9% up on the same period the year before.

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