Solid performance for Toolstation owner in a ‘challenging market’

Toolstation and Wickes owner Travis Perkins saw revenue grow 3.5% in the first half of the year (2.7% like-for-like).

Adjusted operating took a hit at 2.1% lower (£190m) due largely to investments and a challenging Plumbing & Heating market.

CEO John Carter said Travis Perkins had delivered a strong performance against a challenging market backdrop, including weakening housing transactions and consumer confidence, as well as industry input cost inflation.

Toolstation highlights

  • Toolstation retained its Which? ‘Retailer of the Year’ award in 2017
  • UK network expansion continued at pace, with 19 new stores opened
  • Improvements to the digital customer experience, including reducing click & collect times, extending online only ranges and improving product reviews, local search, and personalised offers drove a significant step up in sales growth, Travis Perkins said.
  • INTERNATIONAL: The expansion of the Dutch Toolstation network continued, with an additional 5 stores opened bringing the total to 17, and a “very encouraging like-for-like performance”. Web sales in France and Germany also grew well and a new website was launched in Belgium in Q1.

Wickes highlights

  • The store refit programme continued to roll out in H1 2017, with a further 18 completed. These continue to deliver strong growth in sales in both showroom and core DIY categories with 82 new store formats now in operation
  • The Kitchen & Bathroom showroom activity delivered excellent growth in the first half through its compelling range and targeted promotional activity, albeit this is expected to moderate in the second half
  • Further progress was made to improve the online proposition, with new range extensions and same-day, one-hour delivery slots

Merchanting division

TP said the General Merchanting division had seen a deliberate trading stance was taken early in the year to recover cost price inflation, caused by both currency exchange rate volatility and commodity price pressure. At the same time, a new pricing tool was rolled out across the division: “This provides better guidance to branch colleagues and results in more consistent pricing to customers whilst enabling the business to maintain gross margins.”

CEO statement

CEO John Carter said: “We executed our plan well and delivered a solid overall performance in the first half of 2017 against a challenging market backdrop of pronounced input cost inflation and market volatility. The robust growth and outperformance in our Contracts and Consumer divisions build on strong customer propositions and successful investments in those businesses. In the first half of the year, the Group made a conscious decision to recover input cost inflation selectively through disciplined pricing activity. Whilst this had some impact on trading volume, it enabled us to maintain Group gross margins and positions the business well for the future. Today we have announced a comprehensive transformation plan in our Plumbing & Heating division which is designed to stabilise performance and to create more options to maximise shareholder value. Whilst we remain cautious on the macro-economic outlook for the second half, the Group remains focused on executing the clear plans it has in place which will deliver strong cash generation and maximise returns.”

Outlook

“The long term drivers of market growth remain strong, centred on the UK’s requirement for more homes and the structural under investment in the repair, maintenance and improvement of existing dwellings and infrastructure.”

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