Rising costs at Travis Perkins will impede investment in Wickes

Following today’s release of Travis Perkins H1 figures for FY2020, Georgina Sreeves, Associate Retail Analyst at GlobalData, a leading data and analytics company, comments:

“The pandemic continues to throttle Travis Perkins as group sales declined £703m to £2,781m in H1 2020, dragged down by its plumbing & heating and merchanting businesses where sales dropped 33.3% and 25.9% respectively. Its retail division (Wickes and Tile Giant) performed better, declining 8.5% against a strong comparative of 8.9% the previous year. Toolstation was the only division to achieve growth, with sales increasing 37.1% over the six months, supported by new space and acquisitions. Declining revenue and rising costs from restructuring the business and responding to COVID-19 meant the group swung from an operating profit of £62m in H1 2019 to a loss of £92m in H1 2020.

“Early signs of recovery in its retail division will be encouraging for Travis Perkins; in May, Wickes’ core DIY sales offset the slow recovery in kitchen & bathroom installations, and, in June, retail l-f-l sales achieved strong growth (+21.7%) following store reopenings. However, this performance falls behind Kingfisher, which revealed +15.5% l-f-l sales growth in May and +25.9% in June. Wickes was too slow to reopen its stores; by the time it decided to trial store reopenings on 30 April, all 288 of Kingfisher’s B&Q stores had already reopened.

“The demerger of Wickes will remain on hold until markets are more stable. Travis Perkins is in the midst of a restructure, which could threaten much-needed investment in Wickes to navigate through the rest of the year, with demand for DIY set to recede as consumers return to work, and as financial uncertainty persists.”

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