Near the middle of the month I reported on the news that KPMG had been brought in at troubled home improvement group Entu in a bid to save the business. You can catch that post here.

At that time, shares in the company were worth 11.25p each. This was down from an all-time high of nearly 145p per share just a couple of years ago. Naturally, when a company of the likes of KPMG are called in, you start to worry. I would say that most associate KPMG with administration services, or that is at least the bits of business that get the most press.

Last week however, Entu shares dropped further, settling at 9.25p at the close of trade. It’s been a few weeks now since KPMG were called in. Is this an early sign of the progress made? And should the largest companies in our industry been looking at this as a warning sign?

How much lower?

In theory, a share can lose all value. When you look at a three year chart for Entu shares, that’s pretty much what they’ve done. A high of nearly 145p to just a nudge above 9p is about as dramatic as that gets. I’m not sure how much more selling off of shares will lower the value even more.

Credit: Bloomberg

It’s not a good sign, and won’t make the job of selling the whole, or parts of the Entu business any easier for KPMG. You have to wonder, when you look at their 2017 half year report, how viable a wholesale purchase of the whole group will actually be. In fact the sounds and commentary around some of our industry’s biggest companies isn’t that great across the board. If I was an investor, this is an area of fenestration that doesn’t exactly appeal.

That being said, there are a few companies out there who managed to stave off the flat-line. A bit of a different sector, but look at Apple. That company was on the brink of collapse. Share prices were worth nothing. Then, a new direction, with a new product, and boom. Apple is now one of the most valuable companies on the planet. Now, in no way am I saying that Entu could perform a phoenix-like resurrection of the likes of Apple. But, if those at the top of the business are willing to take a serious look at how home improvement sales should be done in 2017, there may just be a slim chance of saving the group.

This would hinge however on the group finding more cash, which is one of the aims KPMG has in it’s work. Lets say they manage to sell a few parts of the business, and manage to attract some cash injection from somewhere, they also need to adapt to home improvement sales in the modern age. This is where most big businesses are getting it wrong in our industry right now and only a wholesale change of attitudes and approach I believe will make any sort of different.

DGB Business

A sign of the times

It’s not only Entu shares that have taken a pummelling in the last few weeks. If you check out this post here, you’ll find that pretty much every major fenestration company listed on a stock exchange has lost value. Some worse than others. Safestyle being the one that stands out the most if you read that post.

Is this a sign of the times? We’re in an odd situation at the moment when it comes to the UK economy. We’re still growing, but at a slower rate than in previous years. The growth so far has been from manufacturing and consumer spending. But that consumer spending is starting to slow and inflation starts to rise higher than wages. This means that certain demographics of people start to stop spending, and it’s big ticket items that slip further down the list in times like this.

Problem is, it’s the biggest companies in our industry, like the national installers, who tend to suffer. The types of people that buy from these companies are also the ones likely to stop spending first as things start to look a bit uncertain. The younger generation, who are more susceptible to the “sales” and “discount” marketing ploys. When this group stops spending, you notice.

On the other hand, what I have seen signs of throughout much of this year, small to medium sized installers and fabricators appear to be having a pretty good year. Sales are reported to be strong, lead levels good, hiring of new staff taking place. It is these types of businesses that attract a different demographic. A more discerning customer, slightly older, less indebted, wiser, where bills are less of an issue. These are the people who will continue to spend, invest in their home, buying big ticket items like windows and doors.

This, for me, is a sign of the times, at least in the medium term. The window and door industry is a very different place to even just ten years ago. Our products have evolved massively. Marketing has improved. The internet has opened up our industry like never before. The old ways of selling and operating a glazing business are dead. The SME’s in our industry are agile and small enough to adapt and make the most of this evolved industry. The bigger companies, with antiquated attitudes and archaic methods of selling are going to continue to struggle until one of them hits the wall.

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