finance

Travis Perkins profits hit by DIY slump



Builders’ merchant and Wickes DIY chain owner Travis Perkins has warned over a blow to annual profits as Britons choose not to splash out on major kitchen and bathroom upgrades.

Shares tumbled 10% as the group said it now expects 2018 underlying earnings to be in the lower half of the expected range after Wickes suffered in the first half from weak consumer confidence, competition and a flagging property market.

Like-for-like sales tumbled by 7.7% across the Wickes chain in the six months to June 30, with sales of so-called big ticket items such as kitchens and bathrooms particularly affected.

The group took a £246 million writedown as a result and launched a hefty cost-cutting programme that saw its head office workforce slashed by a third in May, while it is also controlling branch staffing levels to match trade.

Half-year results showed underlying first-half pre-tax profits fell 4.6% to £167 million.

On a statutory basis, the group slumped to a pre-tax loss of £123.4 million against profits of £167.6 million a year earlier.

John Carter, chief executive of Travis Perkins, said: “Wickes has had a far more challenging period as weaker consumer spending trends, combined with a difficult competitive environment, have held back profitability.

“Consequently, the Wickes team is executing a significant cost reduction programme.

“Whilst these savings will help drive improved profitability through the second half of the year, Wickes’ profits will be lower than previously expected.”

He added the group had launched a “comprehensive review” of its business in light of the tough trading conditions, which are not expected to ease in the near future.

Travis has previously pledged to take more costs out of the business and improve efficiency as the poor consumer confidence and a subdued property market have weighed on demand for DIY products.

In its half-year results, Travis said the Beast from the East also impacted sales in March and April, with Wickes failing to claw back ground lost.

But Toolstation continued to perform well, with like-for-like sales growth of 10.7% in the first half.

This failed to offset the Wickes woes, with overall earnings in the consumer-facing division tumbling 36% to £29 million in the first half.



READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.  Learn more