3Travis Perkins, the owner of Toolstation and - for the time being - Wickes, reported 3.8% revenue growth in 2019 amid difficult market conditions.
Toolstation's upwards trajectory continued with 65 new branches to reach 400 branches and a corresponding revenue growth of 25.7%.
The group also acquired a controlling share of Toolstation Europe. While that has paved the way for future growth in continental Europe, Toolstation Europe saw some consolidation in Q4 and corresponding losses of £4 million. The Europe side currently includes 66 branches, with 22 opened in the Netherlands. Trial branches have been opened in France and Belgium.
Merchanting grows but places new ERP project on ice
Sales grew 2.6% for Travis Perkins' Merchanting businesses, up 3.3% on a like-for-like basis. TP said merchants won market share in challenging conditions, in H2 particularly, with "significant levels of political uncertainty impacting consumer confidence".
Pressure of margins was driven by changes to TP's customer mix, with stronger sales to larger customers. The group said that its move to regenerate the Merchanting side of its business, including giving branch managers more power to act quickly and make decisions, was paying off.
A new ERP platform to support the Merchant businesses was halted in 2019, largely due to "significant risks relating to performance of the system". The Group terminated its relationship with the software provider and an impairment charge of £108 million was recognised in respect of the cancellation of the programme.
The Merchanting branch network now numbers 1001 (2018: 984).
Wickes, part of Travis Perkins' Retail category, has a strong recovery in 2019 and saw margin pressure instigated by competitor pricing activity stabilise compared to 2018. With the wheels fully in motion for the de-merger, that process is expected to complete in Q2 2020.
Prioritising Toolstation and regenerating Travis Perkins general merchants
“Against a challenging market backdrop we have delivered a strong operational and financial performance across the Group," said Group CEO Nick Roberts. "Our merchanting businesses gained market share as a result of a range of initiatives to improve our customer proposition, including increased local empowerment for our branch managers, while the pace of the Toolstation expansion accelerated. The actions put in place to improve our Wickes and Plumbing & Heating businesses meant that both recovered well during the year and made positive contributions towards the Group’s overall performance.
“Our strategic progress in 2019 has been significant, but there remains much work to do in order to build stronger foundations for the Group to deliver enhanced returns and long-term growth. Our immediate priorities are the regeneration of the Travis Perkins general merchant, continued growth of Toolstation, further simplification of our business and successful delivery of the demerger of Wickes.
“The long-term fundamental drivers of the Group’s end-markets remain strong, and our
businesses enjoy leading positions in their respective markets. Whilst trading conditions in 2019 have been challenging we have seen some green shoots of recovery in our lead indicators, although it remains too early to point towards any tangible improvement in RMI. The Group remains focused on delivering against our key priorities, and we are optimistic that we can build on the positive performance in 2019, continue to outperform our end-markets and deliver improved returns for our shareholders.”
