Howdens: UK Kitchen Demand and Supply

Former General Manager at Wren Kitchens

Why is this interview interesting?

Key takeaways:

  • Fitter supply is tight due to lack of training and new recruits entering market during covid
  • HWDN has advantage in that builders are booked out in advance and they earn more fitting for HWDN vs Wren
  • The internet has changed the shopping experience for kitchens and favors retailers like Wren
  • As kitchen demand and fitter supply normalizes, we will only then see the change in the relative competitiveness of HWDN vs Wren
  • Even if HWDN maintains volume, it may have to extend the range and improve product to stay competitive with Wren

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.

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Executive Bio

Scott Taylor

Former General Manager at Wren Kitchens

Scott has 9 years experience in the UK Kitchen market. He started his career launching B&Q's kitchen to compete with Howdens before joining Wren Kitchens on the retail side. He also ran Wickes' kitchen and bathroom offering and is no the National Retail Manager at TKC, a leading UK kitchen supplier.Read more

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Howdens: UK Kitchen Demand and Supply(March 8, 2022)

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