Exclusive research for BMJ/NMBS supplement throws new light on independent builders merchants’ financial performance.
Some independent merchants in the UK have seen sales fall by as much as 32% in the past couple of years – but others have seen sales rise by as much as 58%. Gross margins range from less than 13% to more than 40%, and operating margins from more than 15% to minus 7%. Some independents achieve stockturn figures of more than 16 times a year, when others manage less than two. And staff costs can account for as much as 37% of sales – or as little as 7%.
These are among the key findings of a major new research exercise undertaken by BMJ for the latest edition of Independent Merchant, its regular supplement published in conjunction with NMBS.
The research identified nearly 100 merchant businesses which achieve turnover below £20m (above this they qualify for inclusion in BMJ’s annual Trail Blazers survey) and which file full accounts, and analysed them by five key ratios: sales growth, gross margin, operating margin, stockturn, and staff costs as a percentage of sales.
Turnover of the companies analysed covered a wide spread – from just under £16m to just under £250,000. Overall, the sector recorded an average year-on-year sales decline of 3.29%. Average gross margin was 28% – but 21% recorded gross margins of 35% or more, and a similar number achieved gross margins of less than 20%.
79% of merchants recorded an operating profit, and across the sector, average operating margin was exactly 2.5%. Stockturn performance varies wildly: the sector average is seven times a year, but 9% achieved 12 times a year or better. Staff costs vary hugely: from only 6.8% of sales at one end of the spectrum 37.1% at the other. The sector average is 17.3%.
Read the full story in the July 2011 issue of Independent Merchant, available from BMJ or from NMBS.