VERTICAL

Gross margin focus drives Howden profits

03.03.2011

Trade kitchens supplier Howden made gross margin the cornerstone of its strategy and reaped the rewards with a 47% leap in before tax profits in 2010.

The 489-depot business returned pre-tax profits before exceptional items of £100.9m as group sales climbed 5% to £807.9m. Gross margin lifted 20 basis points to 59.8% - a full six percentage points higher than in 2008.

It said this had been achieved through an early year price hike, manufacturing efficiencies, and by hammering home the importance of gross margin to depot staff.

Howden's business model is built on supplying small scale builders who in turn service the residential kitchens market. It says it believes there is scope for it to have 650 depots across the UK and it expects to ramp up expansion activity this year. It opened 27 depots in 2010.