Travis Perkins is shoring itself up against an uncertain UK outlook by closing at least 30 branches, the company has revealed.
Travis Perkins said it has outperformed its markets in Q3, with total sales growth of 3.4% and like-for-like growth of 2%, but highlighted that it was too early to predict customer demand in 2017.
Closing over 30 branches in Travis Perkins’ trade businesses will affect 600 employees, who have been made aware of the changes. Thanks to the move, the company will see exceptional charges in 2016 of between £40m and £50m – the company will have to wait around 18 months to feel the benefit of the ‘efficiencies’.
Despite the move, the Group said it remains committed to expanding its network, including Wickes, Travis Perkins, Toolstation, CCF and Benchmarx: “These businesses have significant headroom to grow, are delivering strong marginal returns on invested capital and convenience can be further improved for customers through a broader network of shops and branches. In the third quarter the Group opened a net four new Travis Perkins branches, seven new Benchmarx branches, a net three new Wickes stores and nine new Toolstation stores.”
John Carter, Chief Executive said: “General Merchanting delivered a solid result in the third quarter alongside very strong performances in our Consumer and Contracts businesses where we materially outperformed our markets. Our Plumbing & Heating results were disappointing and whilst market conditions have worsened, we are not satisfied with our performance and will commence reviewing these operations. Our operational focus remains on improving all of our customer propositions, optimising our networks, intensifying our use of space and exploiting the scale advantage we have created. We expect this focus to underpin our outturn for 2016, albeit with Adjusted EBITA slightly below current market consensus of around £415 million.
“It is still too early to predict customer demand in 2017 with certainty and we will continue to monitor our lead indicators closely. Given this uncertainty we will be closing over 30 branches and making further efficiency driven changes in the supply chain, resulting in an exceptional charge of £40-50 million this year. We have a proven track record developed over many years of taking swift action to take advantage of opportunities as they arise in whichever part of the cycle we find ourselves. The strength of the Group’s balance sheet and the competitive advantage we have created through the investments we have made position us well to continue outperforming the markets we compete in and drive shareholder value over the medium term.”
General Merchanting sales grew 3.8% in Q3 and 0.6% on a like-for-like basis. Total sales growth benefitted from the 11 new Benchmarx and TP branches opened and 13 branches transferred from Keyline in Q1 2016.
Consumer sales grew 9.1% in Q3 and 6.3% on a like-for-like basis. The group said: “Investments in better value, improving range, in the supply chain, in the convenience offered by the growing network of stores and in the delivery service helped both Wickes and Toolstation to materially outperform the market.”
Looking ahead, the firm said: “The Wickes new store format is delivering significant improvements in sales and returns with 12 Wickes stores refitted in Q3 bringing the total number of stores operating in the new format to 50. The multichannel experience has been improved in Wickes with delivery slot of choice now launched and the trial of deliveries within an hour underway. Toolstation has reduced the lead time on Click & Collect and Travis Perkins has launched 2 hour Click & Collect nationwide. Further investments in value, as well as range enhancement and extension in Wickes, Toolstation, Benchmarx and Travis Perkins are delivering both a better customer experience and improved returns for shareholders.”