Investment Column: Beds do better for Silentnight
Thursday 09 October 1997
Airsprung's problems look very specific. While its beds business remains comfortable, Airsprung flagged up serious management shortcomings and quality problems at a couple of recently acquired companies. That leaves Silentnight as a more reliable bellwether of the UK furniture market and a far better bet for investors.
With British folks only replacing their bed once in 15 years on average and prices static at around pounds 300 for an average double, the UK bed market has little room to grow. That said, after a downturn in the 1990s, rising consumer spending means the market is now bouncing back. Silentnight achieved an impressive 13 per cent rise in bed sales in the last quarter, boosted by post election confidence, to give an overall 9.4 per cent lift at the half year.
However, Bill Simpson, chief executive, says Silentnight's UK laminated cabinet division, currently 30 per cent of group turnover, is the key to long-term growth. Assembled laminated furniture is cheaper than solid wood and as technology improves increasingly popular. Silentnight has around half the UK market and has been growing cabinet sales at some 15 per cent a year for the past six years.
Consolidation among UK furniture retailers - witness yesterday's H&C bid for Kingsbury - will benefit the big players. Silentnight, with cash in the bank, will undoubtedly be looking to buy up casualties from that trend. It has already picked up cabinet business Meredew on the cheap. Though still loss-making, the business is recovering and adds valuable capacity.
The failure of a US furniture retailer hit Silentnight's US bed profits, but that is a one-off and cautious expansion into a strong US market will continue. Analysts forecast pounds 16m for the full year. On 13.5 times, the shares, down 17.5p to 315p after a strong run on Tuesday, look reasonable value.
- 2 Why this father didn’t hide his daughter’s heroin overdose in her obituary
- 3 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 5 The most powerful passports in the world
Nepal earthquake in pictures: Photos show devastation caused by 7.8 magnitude earthquake
Smartphones are making children borderline autistic, says psychiatrist
Nepal earthquake: The race is on to help thousands trapped under rubble around Kathmandu, while remote villages face a long wait for help
Royal baby: Live updates as superbug closes ward at St Mary's Hospital where Duchess of Cambridge is due to give birth
Teaching profession headed for crisis as numbers continue to drop and working lives become 'unbearable'
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
Rupert Murdoch berated Sun journalists for not doing enough to attack Ed Miliband and stop him winning the general election
iJobs Money & Business
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...