Gavin Slark, the sturdy chief executive of the Grafton building materials group, strides into a meeting room at its south Dublin headquarters. With his three-piece suit, hipster glasses and broad north of England accent, Slark is a likeable mix of smooth and granular. A sophisticated corporate executive who looks like he could also pave a driveway, the man appears to suit his business.
Slark isn’t late, but apologises as if he were: “I hope you haven’t been waiting too long. I just got chased down the corridor by one of our accountants.” Presumably, the bothering bean counter had good news for the boss.
London-listed Grafton, which owns the Woodies DIY chain and more than 550 builders' merchants across Ireland, Britain and Belgium, this week announced interim sales of £1.02 billion (€1.28 billion), up 11 per cent, with an 88 per cent hike in underlying pre-tax profits to £46 million.
No wonder Slark is in such good form, as he inhales a banana for lunch and gets stuck in to talking business. But as the leader of an Irish company pegged to the building industry, shouldn’t he be in despair instead of counting the spoils?
‘Under control’
“We’re profitable, cash-generative, our debt is under control, and the banks and shareholders are on side. If you take everything else out and focus on just those things, the business is in a good place.”
Grafton was stewarded for 26 years by Michael Chadwick until Slark arrived in 2011, with Chadwick moving to a non-executive chairman's role. That is usually a corporate governance no-no, but Slark claims the handover was "textbook".
“Credit to Michael, because when I turned it up, it was a case of letting me get on with running the business. I think the changeover has worked brilliantly.”
Grafton has emerged from the British and Irish property and building crashes in such fine fettle that it is now targeting expansion on the continent. Belgium, where Slark says the company is “learning” how to operate in a new culture, will make for a handy beachhead.
It has ridden the wave of the property recovery in Britain, from where it derives 75 per cent of group revenues. It is also starting to reap the fruit of a swingeing crisis-era restructuring of its Irish operations, as well as the embryonic recovery that started flickering here late last year. As well as Woodies, Grafton also owns the Chadwicks and Heiton Buckley builders’ merchants in Ireland.
Financial performance
The economic improvement has helped, but Grafton has also helped itself.“Up to the first half of 2013, most of the improvement in our financial performance was down to self-help,” says Slark. It put its Atlantic Homecare chain into examinership during the crash, axed about 1,200 jobs and took an angle grinder to its debt.
“But from mid-2013, the market really picked up in the UK and Ireland stopped getting any worse.
Then from February this year, even Ireland started getting better – primarily in merchanting as opposed to retail – although it is happening slowly.”
Since February, Slark says, the once Dublin-centric recovery has also begun to ripple out to the rest of Ireland. “Except for the midlands. That’s still a bit tougher than the rest.”
Grafton is far and away the biggest player in the building materials’ sector here with at least a fifth of the market, while its 38 Woodies stores make it the undisputed king of Irish DIY. In Britain, it is the third-biggest in building materials with 11 per cent, so has plenty of headroom.
Its recent strategy has been to open specialist electrical and tool hire “implants” in its merchanting outlets to squeeze more sales from its asset base. The move has helped to drive up margins in the business,
Slark says that, far from being reliant on new housebuilding, the company derives most of its revenues from homeowners choosing to repair and improve their homes. The doer-uppers, so to speak.
“Someone moves house, and statistically, they tend to look at major investment in six months, like converting the garage or whatever. So the volume of housing transactions is actually very important to us.”
The property market has spiked in the southeast of England over the past year, driven by the booming London market, but Slark believes it will soon settle down and there is not much risk of a new bubble.
In Ireland, he also plays down recent talk of a new property bubble in Dublin, and believes much of the fear is down to the emotional scars of the crash.
“When a bit of blue sky starts to poke out from behind a big cloud, people often start to wonder if things are really getting better, or if there is another storm on the way. Recovery is coming. It is just a case of what that recovery will look like.”
Merchanting is 90 per cent of the business, but Woodies DIY accounts for the bulk of Grafton’s public profile in this country. Slark describes it as one of Ireland’s “top five iconic retail brands”.
Last year, he brought in former Irish head of Dixons, Declan Ronayne, to refocus Woodies back towards traditional DIY, decorating and gardening. It has cut a number of product lines, such as flat-pack furniture, that were introduced during the crash "to keep tills ringing". "We need to be brilliant at those three core areas, rather than average at a number of things." Slark's route to the chief executive's chair at Grafton is the culmination of more than three decades of hard work, though he is not yet 50. He was born and brought up in Sunderland, a football-mad northern city that has had it tough since the demise of coal mining and ship building. He moved further south with his family to Leamington Spa while still at school.
“I left school not knowing what I wanted to do, and probably thought I could make it as a drummer,” he says. He still owns a drum kit for “stress relief”, which is possibly no consolation to his wife.
He could have attended college – you get the sense that he had no fear of academia – but chose instead to work straight from school, as a trainee manager at an electrical store. “I was surrounded by accountants. My mother was a book-keeper, my father was an accountant, my sister and now my eldest son is even doing an accounting degree. But I just wanted to work.”
Happy grafter
The term “grafter” is usually loaded with sympathy – as if the person to whom the moniker is attached had limited ability, but somehow made the most of it. Slark, however, agrees that he grafted deliberately. “There was a motivation to prove to myself that I could make it through work. There is a sense of satisfaction from being able to wake up in the morning, look yourself in the mirror and say I am going to give this my best shot today.”
Picking up qualifications and diplomas along the way, he “grafted his way through various roles at East Midlands electricity for nine years until 1991, before a pair of four-year stints at the retailer that became Blockbuster and Motor World. He then ran Dulux Decorator Centres for three years before joining BSS, a listed plumbing and builders’ supplies group, in 2002.
By 2005, he was chief executive. By the time he sold BSS five years later, he had doubled the FTSE 250 company’s turnover to £1.4 billion. “Having left school at 16, that was satisfying,” he says.
Intellectually stimulating
Chadwick, who built Grafton up in the UK through a plethora of bolt-in acquisitions, then came calling. The job, he says, is “intellectually stimulating”. Emerging from a cataclysmic building slump while simultaneously planning for a European invasion is “stimulating”, right enough.
Being a Sunderland Mackem, football permeates Slark’s persona. He describes the future execution of its expansion into other European markets using the metaphor of the football transfer window: “You know you need to buy a striker, but you can only buy from what is available. You have to be flexible.”
Following its recent acquisition of MPro, Grafton now runs the largest builders’ merchants in Belgium. “Wherever [else in Europe] we go, if we go anywhere, will be a well-thought-out move. We would probably go somewhere with an initial acquisition, as we did in Belgium, to first learn the market, and take on a local management team.”
Despite his evasiveness over the details, the European expansion plan seems firm. So what markets has Grafton researched?
“Lots,” he grins.
Which ones can you tell us about?
“None. But in five years, our European business will be significantly bigger than it is today.”
Slark finishes up by emphasising that, despite the company shifting its listing from Dublin to London last year to tap a wider investor base, it will remain headquartered here.
“Grafton’s listing is in the City of London, but its heart is is in . . . Sandyford Industrial Estate,” he says, bursting out laughing.
He then heads to Grafton’s impressive Woodies DIY outlet in Carrickmines for photos, where he poses patiently for the camera like an old pro.
One further clue to Slark’s pride in his workmanlike roots emerges just as the interview ends. He spends about a third of his time in Dublin, so obviously keeps a car here. Outside head office, he is about to jump into his swanky brand new BMW when he spots my battered Mazda 6.
He gazes at the banger.
“I had one just like that until last week,” he says, wistfully. “There was nothing wrong with it.”
Then’s he off. More work to do. More graft . . .
CV: Gavin Slark
Name: Gavin Slark
Job: Chief executive of the Grafton group Age : 49
Home: Leamington Spa, Warwickshire, UK
Education: College diploma in business studies and studied at London Business School
Family: Married for 28 years with two sons
Something you might expect: He has a "continuing commitment" to keep Grafton headquartered in Ireland
Something that might surprise: He cycled coast to coast in Italy – Pisa to Venice – last June.
