The Travis Perkins Group significantly adapted its business to tackle the challenges of Covid-19 in H1 2020, not least with making provision for markedly increased levels of Wickes and Toolstation Click & Collect business.
Revenue was down 20% to £2,781m in the six months ended 30 June 2020 and lower sales volumes contributed to an adjusted operating profit of £42 million (2019: £220m).
Significant restructuring and branch closures have saved the group cash, while Wickes Click & Collect sales were up 1,000% and the proportion of C&C business for Toolstation rose from 10% to 90%, the latter using a “timeslot drive-through model”.
Travis Perkins ran a “service-light” operating model from late March and the onset of the lockdown period. Around a third of merchanting branches were open, while Wickes and Toolstation leveraged strong digital capabilities to enable direct delivery and click & collect in specific timeslots.
May and June saw more of the merchant network open to support construction activity. Wickes and Toolstation began welcoming customers back into stores in late May. The Group benefited from around £45million of furlough support, with few still on furlough by June end. Business Rates Relief is expected to save the company £80m. The Board of Directors and Group Leadership Team also decided to reduce their salaries by 20% for three months from 1 May.
Restructuring
In mid-June, the Group revealed plans to close 165 branches, largely in the trade merchant business, with annual cost savings of approximately £120m. These were closed by early August and 2,500 jobs were cut (9% of the workforce).
The move also reflects that the Group moving away from smaller subscale branches – where social distancing is more challenging and profiting from higher volumes is more difficult – towards fewer larger branches with greater breadth and depth of product range.
Fewer physical customer visits to specialist merchants also led to the move, the Group said.
“Throughout the pandemic, the health and safety of our colleagues and customers has been our primary concern,” said CEO Nick Roberts. “Customer interactions have changed significantly resulting in changes to the way we do business, from increased activity through digital channels through to alterations to our physical store formats in order to maintain safe working practices. Although our financial performance in the first half of 2020 was impacted by the Covid-19 pandemic, and we have had to undertake a restructuring programme in light of the challenging outlook for the Group’s end markets, we have made significant strategic and operational progress against the four strategic priorities we outlined at our full year results in March 2020.
“Although considerable uncertainty around the impact of the COVID-19 pandemic remains, the actions we have taken to adapt and innovate in our businesses mean that the Group is well placed to continue to service our customers, support our colleagues, outperform our markets and generate value for our shareholders.”
The strong performance of Toolstation Click & Collect was aided by a website rebuild, performed "in a matter of days", to handle increased volumes, before the wider IT infrastructure of the business was replatformed over the following weeks. The Toolstation branch expansion continues - nine were opened in H1 2020, and 60 new branches will be opened in 2020 in total, the Group has confidently confirmed.
The Wickes demerger remains on hold until markets become more stable and predictable.
