Howden Joinery, Wren Kitchens, and HWDN in France

In Practise Weekly Analysis

Howden Joinery Group PLC

Why is this company interesting?

Founded in 1995, Howdens is the number one trade kitchen supplier in the UK. The company has ~800 depots in the UK and ~50 in France and Belgium combined. Howdens is a trade-only business serving local builders with a focus on high product availability, generous trade credit terms, and high depot density to save builders time and money completing jobs.

Howdens is vertically integrated and manufactures all worktops and ~30% of frontals in the UK. Depots are located on inexpensive industrial real estate and only require £350k capex and £350k of inventory cost to open. At maturity, each depot earns ~£2m in revenue and ~20% EBITDA margins.

Howdens has compounded FCF per share over 12% for 20 years and consistently earns ~50% ROIC. The company’s founder stepped down in 2018 and the Former Screwfix CEO now runs the business. Howdens believes they can reach 900 depots in the UK and is now expanding to France and Belgium which is the potential growth opportunity.

“We supply from local stock, nationwide, the small builder’s ever-changing routine kitchen and joinery requirements, assuring no-callback quality and best local price. Howdens was designed from scratch with the needs of the small builder in mind. That is our absolute focus.” - Matthew Ingle, Howdens Founder and Former CEO, 2010

Founded in 1995, Howdens was built to serve the local builder. The company manufactures and sells kitchen cabinets and joinery to builders who fit the kitchen for the end user. Howdens’ trade-only model is engineered to avoid the inefficiencies of a retail model where all cost savings are passed back to the builder.

The company operates from ~800 depots and has ~32% market share by volume of the UK kitchen market. Howdens’ unique business model generates a consistent ~50% ROIC and has compounded FCF per share at 12% per year over the last 20 years.

We recently interviewed two executives to explore Howdens: one from the largest UK kitchen retailer, Wren Kitchens, and another with a Former Howdens executive who worked in the Netherlands business before the company exited the country in 2018.

We interviewed these executives because we’re exploring two questions that we believe are important for Howdens:

  1. How could the growth in Wren Kitchens impact Howdens' core UK business?
  2. What can we learn from Howdens' history in the Netherlands that could help us understand the French market opportunity and the broader European growth opportunity?

The Potential Threat of Wren Kitchens

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