Ann: Trading Update, page-46

@just_guy

Keep up the good work. As long as you keep trying to think critically and independently, then you'll be on the right track! We cannot easily choose where we end up, but we can choose what track we are going to be on. Sermon over.

With regards to REH, my reading is that REH's revenues have broadly tracked building activity since about 2000, though at times it has moved ahead of it. In 2001, when activity contracted very substantially (at circa 10% rates) REH's revenues dropped by about the same.

But I don't think this is the most telling issue (as I'm sure @travelightor would agree). Remember, for most businesses, revenues just have to flat-line (rather than fall) for margins to get squeezed (both at gross-profit level and at the EBIT level), as costs will tend to have their own momentum that is not fully coupled to revenues.

What's really interesting with REH is that each times revenues have stalled (or reversed) the rapidity with which they have been able to remedy the problem (both via reductions in costs of goods and by control of their operating costs). The business has an incredibly good handle on its costs.

But we should really have this discussion under the REH tag...