There appears to be something brewing at Marshalls. That is if the company share chart is to be believed.
On the 9th September 2015 Marshalls stock price peaked at 370.80p. As of yesterday, albeit with some minor rallies along the way, the value of Marshalls' shares has plummeted by a £1.00. That's a drop of over 27% in just under 5 months.
This is odd if you take into consideration the rake of recent broker recommendations rating Marshalls as a buy.
Only yesterday. Peel Hunt reiterated its positive stance calling Marshalls a buy, with a target of £3.55 (that's 28% higher than of yesterday).
Don't get me wrong, I know company share prices go up and down even if there's nothing to be necessarily positive or negative about. People buy shares when they are low and then sell again when they are high. When people sell the share price has to fall. So if Marshalls is trading well then the shares will undoubtedly rise again.
It's what trading on the stock market is all about but, having said that, Marshalls has fallen through a few key support levels so I'm rather confused by its demise of late.
A set of unique challenges
Marshalls is a pretty unique beast within the UK domestic landscaping market and is therefore faced with its own unique set of challenges. Its size and structure is both its biggest strength when market conditions are positive - in terms of market clout - but Marshalls' size is also its greatest weakness in terms of how fast it can adapt in changing market conditions. With fears of a further world-wide recession and a downturn in the Chinese market (Marshalls is exposed to China with an office in opened in Xiamen 2012) trading for Marshalls might just become challenging again.
Built around family communities in and around West Yorkshire - the company was started by Solomon Marshall in the 1890's - Marshalls is unique in terms of its delicate employment infrastructure. Although in recent years Marshalls has diversified employment to further afield, much of Marshalls workforce is still derived from the communities in areas where the quarrying and manufacturing operations are based.
By any comparison to its UK competitors, Marshalls is a massive operation.
As UK and world trading conditions deteriorate in the short term, it is going to be interesting to see how Marshalls adapt going forward. Personally I do not see a great deal of upside in terms of expansion and increased sales in the UK domestic landscaping market (partly for reasons stated below).
Competition
Since the dawn of the internet, Marshalls have effectively been thrown into the same pit as every competing business in the UK domestic landscaping materials market. It's just as easy for a small family business to pitch their products market-wide as it is for companies like Marshalls. It's an equal playing field in that respect.
Of course when you're big you've potentially got a lot of ammo in your armoury that can effectively blow any minor opposition away. In yesterday's printed media world, beating off the opposition was as easy as spending a massive marketing budget. You only had to buy up the expensive column inches and flood the market with your company message.
Today that's all changed. Printed media is ineffective in today's market. It's those companies utilising social media that are set to win bigger market share.
That's where the likes of young companies like London Stone come in. London Stone appears to be one sharp company on a mission. With a keen online presence, London Stone is levering social media to form relationships directly with those buying its wares.
With showrooms and product facilities around London itself, I believe that London Stone is showing aspirations of expansion of a UK-wide nature. I wouldn't be surprised to see a re-branding in the not too distant future to reflect its more global ambitions.
Going forward
The next few weeks and months are going to be interesting. I will keep a close eye on Marshalls to ascertain whether there is change happening or if this recent fall is just a blip.
Comments