Home improvements boom leads Marshalls to record first half

Covid restrictions have inspired many households to improve their outdoor living space at a time when people had nothing else to spend their money on.

The Elland-based firm said revenue rose 42 per cent to £298m in the six months to June 30 and revenue was 6 per cent higher than the 2019 figures, before the Covid-19 pandemic struck.

Pre-tax profits were £39m, 5 per cent higher than the 2019 figures and well ahead of the heavily Covid-affected 2020 result.

Sales in Marshalls’ domestic market was again the stand out performer, as spending on patios and driveways continued at pace.

Domestic sales rose 54 per cent on 2020 and were up 17 per cent compared with the same period in 2019.

Martyn Coffey, Marshalls’ chief executive, said: “People are really spending their money on patios and the back of the house.

“People are spending more time at home, potentially working from home. They are looking at space and how they can utilise more space.

“People tend to build out from the back of their house onto their patio. They are putting in small working areas or offices.”

Marshalls said that UK homeowners are having to wait over 21 weeks to upgrade their outside spaces, with domestic installer order books now at record levels.

The group’s sales to the public sector and commercial market also recovered well and there was further growth in its international division.

Public sector and commercial sales rose 40 per cent against 2020 and were up 1 per cent on 2019.

With the market outlook continuing to improve and order books at record levels, the company said it now expects trading in 2021 and 2022 to be ahead of its previous expectations.

Mr Coffey said: “The container cost has gone from $800 in January to about $8,000 today. There is a shortage of containers.

“Demand for goods is very high. There is incredible inflation that we have to pass on.”

The Construction Products Association’s recent summer forecast predicts year on year increases in UK market volumes of 14 per cent in 2021 and 6 per cent in 2022.

Marshalls said it expects to meet or outperform the market.

Mr Coffey said: “From Marshalls’ point of view, we spend more money on new product development.

“Our digital offer is enhanced. We have the broadest offer and with the massive shortage of HGV drivers, having your own fleet is a fantastic advantage and I’d expect us to outperform the competition.”

The group declared an interim dividend of 4.70p, reflecting its strong balance sheet, with low net debt of £7.6m, recovery in profitability and strong cash generation.

Asked whether he thinks trading will cool off now that the lockdown period is over or whether home improvements are now a permanent trend, Mr Coffey said: “I think it’s a permanent trend.

“People will still be working from home and secondly, the biggest complaint I hear from consumers is they can’t get hold of a builder or they can’t get hold of an installer. I don’t see it cooling anytime soon.

“Trading continues to improve and recent order intake has been good.”

He said that market conditions remain supportive, despite supply chain challenges, which are leading to inflationary pressures across the sector.

“The underlying indicators in our main growth markets, including New Build Housing, Road, Rail and Water Management, remain positive,” he added.

“As a result, we remain confident that our strategy will deliver long term profitable growth and that we are well positioned to cope with the temporary challenges associated with cost and material supply issues.

“Encouraged by the continuing strength in demand and the positive trading environment, the board is confident of making further progress and is accordingly raising its expectations for 2021 and 2022.”