Wholesaling Review: May 2008
Each month Hays Retail brings you the latest news from Barclays Commercial Bank Wholesaling Review.
To read previous reports, click here.
Sector Overview
According to official government statistics, annual output growth of the wholesaling sector in March was subdued, with only 0.3% annual growth reported when compared to the same month a year earlier. The underlying trend growth rate also eased, amounting to only 1.4% in the three months to March compared with the same period a year ago.
- However, April’s CBI Distributive Trades Survey reported a surprisingly strong balance of 47% of respondents reporting growth in sales volume which sharply contrasted previous expectations of a 20% decline in the balance. This in turn has caused slight optimism about the immediate future with a balance of 5% of respondents expecting growth in May.
- The most buoyant sectors were wholesalers of other goods, durable household goods and industrial materials.
- Meanwhile, wholesalers of clothing, textiles and footwear as well as food and drink recorded a decline, whilst stagnant growth was reported by wholesalers of agricultural machinery.
Outlook
It has been long expected that economic growth in the UK would slow in 2008 as the earlier rise in interest rates began to bite. Concerns about the impact on the wider economy of the disruption in financial and credit markets, in the aftermath of the problems in the US sub-prime market, have led to a further decline in consensus forecasts, which now suggest that growth will decelerate markedly from around 3% last year to 1.7% in 2008. Against this background the growth in the output of the wholesale sector is expected to slow to around 2% for the year as a whole. Those wholesalers supplying consumer and durable goods are likely to be impacted most by the expected slowdown.
Wholesaler news
Wolseley, the largest global distributor of plumbing and heating materials, reported a 30% decline in profits before amortisation and impairments in the 9 months to April 30 despite a 2% rise in revenue. The British firm stated that challenging trading conditions remain and that there had been a marked worsening in UK trading conditions. Also outlined was a cost cutting programme which will see a £50 million cost in the fourth quarter.
Source: Reuters News (21.05.08), FT.com (21.05.08)
Blakemore Wholesale, a West Midlands-based company, has taken over one of the largest wholesale businesses in the North East. Tyne Tees Cash & Carry which reported a pre-tax profit of £1.1 million on a £43.7 million turnover in the year to January was bought out for an undisclosed sum.
Source: The Journal, Newcastle (22.05.08), Evening Gazette (22.05.08)
Click here to view in pdf format.
To view the document, you'll need Adobe Acrobat Reader. Click here to download Reader now.
