CMO Group IPO: Everything you need to know about CMO Group

CMO Group has built a reputation in online retail with its focus on building materials, and has now listed on the LSE’s AIM market. Here’s some background on the company and its potential.

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When was the CMO Group IPO?

The CMO Group IPO on the London Stock Exchange’s AIM market occurred on July 8 2021. The company's £45 million raise initially priced 34 million shares at 132p, with a market capitalisation sitting around £95 million.

The transaction was advised on by Liberum Capital, the sole bookrunner for the listing.

Interested in more IPOs? Take a look at our IPOs for 2021 piece.

How to trade CMO Group shares

When CMO Group lists, you’ll be able to trade its shares in the same way you would any other publicly-traded company on the stock market.

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What does CMO Group do?

CMO Group is a UK-based online retailer of building materials, offering products in tiling, roofing and drainage materials across seven specialist websites. The company’s 75,000 listed products for sale makes it the country’s largest online-only operator in the sector as of 2021.

The company was started in 2008 by four merchants under the name Construction Materials Online. The founders saw an opportunity to disrupt the online sector by launching online roofing merchant Roofing Superstore, with Drainage Superstore added to the company portfolio in 2014 and Insulation Superstore in 2015.

A management buyout in 2017, supported by private equity group Key Capital Partners (KCP) to the tune of £8.7 million, saw the founders stepping down from day-to-day operations. Soon after, the product offering was broadened with 2019’s launch of Tile & Floor Superstore and an acquisition of Total Tiles in 2020.

The company’s revenues for 2020 were in excess of £67 million, according to the company’s Intention to Float document (ITF), comparing favourably to almost £45 million, as shown by Companies House accounts, for the previous period.

What are CMO Group’s competitors?

CMO Group’s competitors in the UK can be split into disparate online-only operators such as Building Supplies Online and BuildingMaterials.co.uk, but also the brick and mortar mainstays such as B&Q and Wickes which also have online ordering services.

How does CMO Group make money?

CMO Group makes money through the sale of its specialist items online, with goods ranging from £26 screed rails to £2,000+ steam pressure washers on Drainage Superstore, to laminate flooring, tile grouting and outdoor flooring on Tile & Floor Superstore.

The company says it is able to offer lower prices due to its direct links with major manufacturers which send products direct to building sites and retail customers, cutting costs of storage and multiple branches.

What is CMO Group's business strategy?

CMO Group’s stated mission is to revolutionise the shopping experience of homeowners and tradespeople. It seeks to become the ‘go to’ digital retailer of building materials, providing market-leading product choice, relevant help and advice, and a personalised customer experience.

The company aims to exploit what it perceives as a slowness in response to the growth in digital trade by its traditional merchant competition. To this point, the company operates what it calls a unique digital hybrid service model, which provides specialist advice and expertise to its online customers to bridge the gap between traditional brick and mortar retailers and pureplay digital retailing.

The company looks to continue growing sales organically by expanding into new segments, building its multi-channel marketing strategy to attract and maintain new customers. It plans to increase its use of artificial intelligence to boost marketing campaigns and personalised customer engagement, and increase take-up of its trade offer. The company will also target acquisitions in a bid to strengthen existing product categories or provide an entry point for new categories.

Such categories are expected to bring higher product margins, as the company improves buying terms with scale, and fixed costs become better leveraged.

Is CMO Group profitable?

CMO Group enjoyed a profitable spell for the period to the end of 2020, according to its ITF, where it cites an EBITDA of £4.4 million. Before this, 2019 accounts show the company made a pre-tax loss of £2.2 million on revenues of £45 million, so speculators will be keen to see if the company manages to sustain the current profitable period and how its plan to increase margins unfolds over the coming months.

Who owns CMO Group?

CMO Group is owned in part by KCP, which will reportedly hold a 26.8% stake in the company following the IPO, with the founders collectively holding a 10.4% share of the business. The remaining ownership details are not in the public domain.

Board of directors of CMO Group

CMO Group has a number of key personnel that have helped progress the company to its current multi-billion-dollar valuation. Here are some of them, correct as of June 28 2021.

Position

Name

Chief Executive Officer

Dean Murray

Chief Operating Officer

Suzanne Packer

Chief Financial Officer

Jonathan Lamb

Independent Non-Executive Chair

Eric Kenelm Ford

Non-Executive Director

James Excell


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