Woodie's DIY owner: Too soon to know if reopening sales jump will last
Woodie’s DIY owner Grafton Group has said it remains too early to judge whether an initial sales surge from the recent reopening of its retail and builders’ merchants outlets will last or was merely an initial release of pent-up consumer demand.
Dublin-based Grafton – which generates the bulk of its revenues from its builders’ supplier operations in the UK – said total group revenue fell 26% to £810.9m (€910m) in the first five months of the year, due to the Covid-induced disruption to business.
In April, alone, group revenue fell 80%, year-on-year, but May showed a 38% year-on-year sales drop as more outlets reopened.
Here, Woodie’s reopened on May 18 to a surge in consumer demand. The DIY retailer saw revenue for the last two weeks of May “comfortably exceed” what was generated in the full month of May last year, Grafton said.
“The overall level of trading during the short period since reopening, while encouraging, was influenced by a range of factors including pent-up demand and may not be indicative of ongoing activity levels,” Grafton said.
Industry body Retail Excellence last month warned of a “two-step economic journey” following the reopening of outlets; where an immediate boost in spending and sales gives way to consumer “hibernation” after initial demand eases.
Grafton CEO Gavin Slark said the Covid restrictions had “a significant effect” on the group’s trading since the second half of March, but early trading indications since the reopening have been encouraging.
However, while he said Grafton will emerge from the crisis “well-positioned for future growth”, Mr Slark said there remain “many challenges” to be overcome in the months ahead.
Grafton is continuing to hold off on giving any forecasts for its financial performance for this year given the continued uncertainty around Covid-19 and its impact on the wider economy and construction activity in particular.
Two-thirds of Grafton’s builder supply outlets in the UK have reopened, with the remainder due before the end of this month.
Grafton has continued to impress in terms of cash management, with the group showing little cash burn and having liquidity levels of £578m (€641.9m) as of the end of May.
It said its excess liquidity will allow it to repay part of its revolving loan facilities this month.
Mr Slark said the group – which also operates in the Netherlands – is in a strong financial position and has a “resilient” portfolio of businesses.
