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The ups and downs of Rapid Hardware

Published: 27 July 2012
The rollercoaster ride continues for Liverpool independent hardware retailer Rapid Hardware since moving in 2009 from its long-term Renshaw Street base to the former John Lewis department store in the heart of the city.
Development of the new store continues. According to the company website, the retailer has fully refurbished over 100,00 sq ft "to give our customers an even better, brighter shopping experience all under one roof, (it's a big roof!) Another 60,000 sq ft will open this year giving an even bigger choice of new products."

Latest accounts, filed this month, show gross margin plunged from 37% to 25.9%. The directors report that "the reasons for the significant reduction have been identified and significant improvements have been made to stock control, buying procedures and pricing".

Sales were just under £11.3m in the 74-week period, compared to £7.45m in the previous 52-week period - up 6.8% on an annualised basis, according to the company. But the drop in gross margin, coupled with £170,000 of delapidations at Renshaw Street and £120,000 of refurbishment at the new store, resulted in a net loss of £1.75m for Rapid Hardware itself, and £2.2m for Rapid Group Holdings. However, gross margin for the six months to December 31 2011 is reported to be back up to 40.6%. Rapid has taken over the management of the Signature Café, previously operated as a concession, and has leased part of the premises to Poundland.

What makes the drop in gross margin interesting is that the accounts for the year to January 31 2009, filed nearly six months late in April 2010, reported that heavy discounting to clear stock in anticipation of the move had resulted in a drop in gross margin from 36.7% to 26.2%. And the accounts for the year to January 31 2010, filed two and a half months late in January 2011, reported that the gross margin of 37% was better than expected in view of the stock clearance.

There have been boardroom changes as well: Daniel Doherty was appointed a director of both companies at the age of 25 on March 9 2010. Company secretary David Clamp left the business on January 31 2011, and directors Eamonn Doherty (46) and Hugh Doherty (80) stepped down on October 6 2011. Auditors SB&P also resigned on January 31 2011at Rapid's request, advising that "there are no circumstances connected with our resignation that should be brought to the attention of the members or creditors of the company"

Staff headcount has been cut from 156 to 119 in the past three years, with a significant improvement in productivity as a result: the wages bill is down from 27.6% of turnover to 23.9%.

Companies House, meanwhile, appears to have grown impatient with repeated late filing. On March 20 this year, it gave three months' notice of its intention to strike both Rapid Hardware and Rapid Group Holdings from the register. The threat was lifted a week later, only to be renewed a few months later on July 3. This time the threat was lifted on July 17, presumably as a result of the 2010/2011 accounts having been filed.


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