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Howden Joinery’s recent performance has been as solid as one of its kitchens. Although revenue and pre-tax profit were flat last year — and a fifth below the £406mn peak achieved 12 months earlier — this should be set in context. Demand for kitchens in the UK (where Howdens generates 97 per cent of its revenue) fell for the third year in succession in 2024, yet the company managed both to increase its market share and widen its gross margin by 80 basis points to 61.6 per cent.
The FTSE 100 company attributes this to its vertically integrated operations and a strong distribution network. It added 29 new UK depots last year, bringing the total to 867. It also revamped 76 others, spending £122mn. Yet, even after allocating a further £116mn to dividends, it finished the year with £60mn more in net cash than it started.
Over the past decade it has generated £3.5bn in operating cash flow (before working capital adjustments) and returned £1.5bn of this to shareholders through dividends and buybacks.
Although there are few signs of a recovery so far this year — like-for-like sales were flat in the first four months — the announcement of a further £100mn buyback has supported a share price that has risen by around 30 per cent since early April.
New chief financial officer Jackie Callaway, who has just joined from thread maker Coats Group, spent £250,000 on shares on June 3.
Investors probably shouldn’t read too much into this, though. Howdens’ remuneration policy requires executive directors to hold shares worth 300 per cent of their salary, and with CFO pay at the group recently increasing by 8 per cent to £515,000 a year, she will be required to build a holding of at least £1.5mn over time.
