Unloved and unexciting, Brussels sprouts are usually given a wide berth. Their corporate equivalent, the padding of investment portfolios, gets pushed around the plate. But furloughed workers and nixed holidays this year have turned traditionally dull fare into the green shoots of recovery.
Purveyors of household goods and DIY were on a roll. Leading the pack, shares in AO World, which has mostly disappointed since its 2014 listing, are up nearly fivefold. In its wake are DIY chain Kingfisher, up by about a third, and home furniture retailer Dunelm up 7 per cent or so.
Some may sneer — such is often the lot of sprouts — but these suburban diehards were already ahead of their retail rivals. Eschewing city centres in favour of big-box out-of-town stores or online sales, they avoided the evisceration of the high street. When the first set of lockdowns shuttered stores in March, online sales flew.
Kingfisher, owner of B&Q and Screwfix, had a horrid April. Like-for-like store sales halved year on year. But June and July were each up 20 to 25 per cent; in the third quarter, sales at its B&Q chain were up 24 per cent. Profitability was not sacrificed for volume gains: retail profit margins gained 140 basis points to 9 per cent in the year to end-July. AO World, a big spender on marketing that has yet to turn a profit at operating level, is set to do so next year.
Can their newfound attractions last beyond the pandemic? A vaccine that puts holidays and office work back on the agenda will inevitably curtail home improvements. But both companies are mid-turnround. Thierry Garnier, who took up the reins at Kingfisher last year, has handed divisional managers more autonomy. AO World has curtailed its costly international ambitions, cutting loose the Netherlands. John Roberts, returning to lead the company he founded, is centralising the structure and diversifying to reduce dependence on product sales. The latter takes time to feed through to the bottom line but will pay off in the longer run. After all, look what the addition of a bit of pancetta and chestnuts did for Brussels sprouts.
This is one part of Lex’s hits and misses of the year, served up as a Christmas dinner. The other four courses and trimmings can be found below.