Wren Kitchens, Howden Joinery, & the UK Kitchen Market Structure
Former General Manager at Wren Kitchens
inpractise.com/articles/wren-kitchens-howden-joinery-and-the-uk-kitchen-market-structure
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.
Wren Kitchens, Howden Joinery, & the UK Kitchen Market Structure(December 1, 2021)
Hamid Gharvan
Former General Manager at Wren Kitchens
Hamid is a Former General Manager at Wren Kitchens where he was responsible for turning around a £12m showroom for the company. He had full P&L responsibility managing the showroom and improving the sales process. Prior to Wren, Hamid was part of a small team who launched Tesco Kitchen business before joining Bettaliving, a UK bathroom specialist. Hamid has over 20 years experience in both kitchen and bathroom sales and he is now working at Elements Kitchens, an independent UK kitchen company.
In Practise Notes
- Wren's target customer
- For Howden's end customer, the contractor always does the fitting which leads to quicker turnarounds and fewer mistakes. It's harder to solve mistakes or replenish missing parts in the retail business because Wren doesn't hold stock and end customers don't have strong relationship with fitter
- Rough customer types: HWDN - buy to let or resi homeowner looking for new kitchen as part of a larger extension or house refurb - £3k kitchen Wren = resi homeowner doing kitchen refurb £8-15k
- Wren now offer contractors with 10% discount if they bring customers in-store instead of Howden
- Wren vs HWDN product quality
- Magnet seems more focused on new build and larger building contractor work than local contractor business like HWDN
- Wren could pose a potential risk to Howden in the long run if they open up mini-hubs between showrooms to serve contractors
- ~20% cancellation rate in the kitchen industry seems incredibly high!
Interview Transcript
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