Travis performance on track despite market challenges

Travis Perkins released their Q3 Trading Update this morning, with headline performance as follows:-

• Q3 Group sales growth of 3.5% and like for like sale growth 4.1%.
• Continued growth across all businesses in their Contracts Division.
• Significant performance improvement in Plumbing & Heating Division.

Chief Executive John Carter commented "We have delivered a good like for like sales performance across the Group in the third quarter against a challenging market backdrop of input cost inflation and market volatility. Volumes were broadly flat with inflation driven price increases the main component of our like for like growth. Whilst it is relatively early days in the transformation plan, it is encouraging to see positive progress in the Heating & Plumbing Division.

Trading conditions in our markets continue to be mixed, with consumer discretionary spend under pressure from rising inflation and on-going uncertainty in the UK economy. We maintain our confidence in the long-term fundamental drivers of our markets and this underpins our plan to invest in our business to improve our customer propositions and extend our competitive advantage".

Download the full trading release here.  

Like for like sales in their Consumer Division, including Wickes, Toolstation and Tile Giant, slowed in Q3 to 2.4%, primarily due to more subdued growth in Wickes, reflecting very strong comparatives from Q3 2016 and an increasingly difficult market environment. 

The roll out of Toolstation continues at a pace, both in the UK and Netherlands, demonstrating excellent like for like and overall sales growth.

Insight & Commentary

Revenue growth has certainly bounced back, though the company is cycling a poor comparative quarter last year, so it's a bit early to call a turnaround just yet following August's disappointing results release.A major bright spot is the vast improvement that's visible in the plumbing and heating business.

A couple of months ago, management was reporting a 1.2% slide in the division's like-for-like sales. Now, they've increased by 5.4%, indicating that selected branch closures and better-targeted marketing investments are paying off. The outlook for Travis Perkins indeed remains murky as strained Brexit negotiations continue to test consumer confidence and play havoc with the pound. 

The tough trading conditions have manifested themselves in flat third-quarter volume growth -- but the signs aren't all gloomy. Input costs, more or less,  have been successfully passed onto customers, keeping margins intact”.

Commentary provided by Fiona Cincotta, a senior market analyst at https://www.cityindex.co.uk/

Read more about the Travis Perkins Group Strategy here. 

Source: Insight DIY Team & Travis Perkins Q3 Trading Update press release.

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