Howden Joinery, the building trade supplier, saw sales rise 3.1% during 2011 at depots which have been open for at least 12 months, though 20 of those mature depots are costing it a packet in rent, the company warned.
Total sales, including new sites, gained 5.5% to hit £838.7m.
The company says profits before tax for the full year will be "in line" with expectations. Currently analysts believe the likely range for Howden's earnings is between £103m and £111m.
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Net cash is expected to be at £50m by year's end, compared to £35m at the end of 2010.
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Howden's opened 20 new depots during 2011, bringing the total to 509 although the firm admits there is still an issue with expensive "legacy properties".
There are still 20 of these expensive rental agreements in place which cut in to margins, despite Howden extracting itself from 69 of them since 2008.
The board now expects to increase the current provision for ending the final legacy contracts by £7m, which would be treated as an exceptional charge in the 2011 accounts.
Panmure Gordon cited the additional legacy property provisions as one reason for sticking with its "hold" recommendation for Howden, despite the building goods supplier achieving a good cash performance. The broker also noted that Howden is coming up against tough comparative periods from last year.
"There was a strong cash performance with the period end position increasing
to £50m, so well ahead of our £29.2m forecast," the broker admitted.
"Against a backdrop of increasing uncertainty on big ticket consumer
spend we have a neutral recommendation. The group still has opportunity to expand its
branch network and these take a number of years to mature, which provides some
visibility ahead for it," said Panmure analyst Andy Brown.
At 11:36am Howden Joinery shares were down 2.64%, at 103.3p. Over the last 12 months the stock has dropped 10.5%.
BS
