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Table 4B. Homecolour percentage (%) turnover and profit contribution by sector, by year
with year 4 most recent.
Year
1
2
3
4
Own label
- sales
55 57
63
68
- profit
45 46
47
42
Branded
- sales
45 43
37
32
- profit
55 54
53
68
Customers
Homecolour supplied consumer paints to the high street, predominantly to the main
retailers. It supplied most of the own label paint lines to the major retailers, and four made
up over 95 per cent of its total own label sales. These companies contributed
approximately 20 per cent of turnover each over the past 5 years, even though there had
been substantial fluctuations on a year by year basis. The company distributed its
branded range, Homecharm, via a number of wholesalers, which had grown to 200 in the
last year, and to the smaller specialist DIY outlets. There were an estimated 4000 of these
nationwide. This range currently contributed 32 per cent of total turnover, but 58 per cent
of total profit, and this followed a trend which had become established over the past 5
years, with branded products providing a steadily greater profit contribution as pricing
pressures in the own label business became more intense.
The company had national coverage via these distribution channels and separated the
country for control purposes into Midland and the North, and the South. Sales were evenly
spread and related to population density. Wholesalers worked on a profit margin on sales
of around 10 per cent, whereas the small specialist DIY outlets worked on 35 per cent
retail margin.
The attraction of the own label business was that the company produced on long term
contracts and did not need to hold stock, supplying their customers at regular and
determined intervals. This was in contrast to the branded sector, which suffered from both
a high level of seasonality and considerable fluctuations in demand. Whereas external
paints tended to be most in demand during the summer, indoor paints were usually bought
in the winter. This pattern could, and was often changed by alterations in the weather
patterns - a poor summer could drive demand of indoor paints up within a short period of
time. The pattern of the last 2 years by month is detailed in Table 4C.
Table 4C. Sales activity by month in two previous years.
Sales percentage by month by activity - previous year - months 1 to 12
1 2 3 4 5 6 7 8 9 10 11 12
Own label
7 7 8 9 9 9 9 9 10 6
9 8
Branded
4 3 4 5 9 12 16 15 8 7
7 10
Sales percentage by month by activity - current year - months 1 to 12
1 2
3 4
5 6
7
8
9
10
11
12
Own label 7 7
8 9
9 9
9
9
10
6
9
8
Branded 7
5
4 5
5 6
6
9
11
14
15
13
Weather was not the only major influence on demand - changing disposable incomes and
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