Grafton group turnover up 2.5% to €2.05 bn

HARDWARE RETAILER Grafton, which owns the Woodies, Chadwick and Atlantic Homeware brands in Ireland, said turnover rose by 2.5 per cent to €2.05 billion in 2011, boosted by an improvement in trading in the last two months of the year.

The company said it expects operating profits to be at the upper end of the €52 million to €55 million range guided in its November interim management statement.

In its pre-close trading update published yesterday, the listed company said that while trading conditions were difficult during the year, performance in the final two months of 2011 was ahead of the same period in 2010 when inclement weather impinged on performance.

The UK business – which accounted for 70 per cent of turnover – experienced a 4.5 per cent increase in sales for the year, compared to an increase of 4.0 per cent in the 10 months to October.

Grafton’s Irish business remained under pressure, however, with turnover at its Irish operations falling by 6.4 per cent last year. This compared to a decline of 7.7 per cent in the 10 months to October, again representing a slight improvement towards the end of the year. Grafton’s Irish business was affected by lower spending on higher value products, which fell by 4.7 per cent, though transaction levels held up well in the Irish retailing business generally.

The group said due to the decision by the Government not to proceed with the legislation to end upward-only rent reviews for existing leases, it is recognising a non-cash provision of €19 million in connection with a small number of onerous leases in the Irish retailing business.

The company intends to book a restructuring charge of €13 million to its income statement for 2011, and an incremental benefit of €6 million in 2012, following the implementation of restructuring and cost reduction measures in response to the strong decline in markets in recent years.

Bloxham described the update as “reassuring”, while Goodbody said it sees a significant upside for the stock over the medium term, though it predicts that an upturn will not happen before 2013.