Howdens attribute some of their success to the higher than usual delegation of commercial decisions to their depot managers. They have stronger margins than the competition which is driven by the company’s sales channel being relatively specialised, as they only sell to kitchen fitters who themselves sell and price kitchens to the end consumer. Whilst the company is sensitive to the housing market and interest rates, it is thought that they have enjoyed a degree of counter-cyclical resilience as many home-owners will move to redecoration in a recession rather than the more costly option of moving house. Historically, Howdens have tended to see sales fall less during recessions, than the overall kitchen market.
The share price has rallied on the back of the perception that we have seen peak rates in the market. The risk is that persistent wage inflation means that rates need to climb again to take demand out of the economy; and that would not help the business.