Travis Perkins: Wickes Demerger On Track For Completion This Month

Travis Perkins plc has published a trading update for the first quarter of 2021, advising of an encouraging start to the year, and stating that the Wickes demerger on track for completion on 28th April. 

Highlights

• Positive start to 2021 driven by strong RMI demand with Group (excluding Wickes) like-for-like sales growth of 17.4% and 11.8% on a 2 year like-for-like basis
  
  
• Good like-for-like growth in Merchanting and P&H, up 15.5% and 11.4% respectively, underpinned by sales retention from the 2020 restructuring programme
  
  
• Continued acceleration of Toolstation growth with like-for-like sales up 42.0%
  
  
• Ongoing strong performance in Wickes with like-for-like sales up 19.7%. Excellent growth in Core of 38.5% partially offset by DIFM, down (25.0)% on a like-for-like basis due to showroom closures
  
  
• Wickes demerger due to complete with trading in Wickes shares commencing on 28th April. Travis Perkins share consolidation to be effective following market close on 28th April, trading in new Travis Perkins shares commencing on 29th April

Nick Roberts, Chief Executive, commented:

"The Group has enjoyed an encouraging start to the year with robust like-for-like sales growth across our businesses, underpinned by strong demand in the RMI market. The Merchanting business has maintained the momentum seen in the second half of last year while Toolstation continues to outperform, driven by its convenient and trade focused proposition. 

I am also pleased to report that the Wickes demerger process remains on schedule to be completed at the end of April, leaving the business a simplified and trade focused group.

We are encouraged by the robustness of the RMI market and the continued recovery in our other key end markets. However, at this early stage in the year, our expectations remain unchanged as we continue to make progress on the delivery of our longer-term strategic plans." 

*Excludes Toolstation Europe

Business performance

Group, excluding Wickes

The momentum in the Group's end markets experienced in the second half of 2020 has continued into the current year. Revenue performance has been boosted by the retention of sales from the branch closure programme conducted last summer and the lapping of a weaker prior year comparator which included the start of the first national lockdown in March 2020, leading to Group like-for-like sales growth of 17.4%.

Throughout January and February all businesses saw a continuation of the trends from the last quarter of 2020. During March, however, the Group experienced a marked step up in activity with pent-up demand and continued high levels of housing transactions fuelling higher RMI spend. In contrast, the new build housing and commercial sectors remain subdued although the businesses with exposure to the "early cycle" trades are seeing the first signs of improvement.

Like-for-like sales in the Merchanting segment were up by 6.3% on a two-year basis, supported by the retention of sales from 2020 branch closures. On a total sales basis, Merchanting sales were down (2.6)% vs Q1 2019 reflecting the overall reduced network capacity.

Toolstation's impressive like-for-like growth continued, driven by its digitally enabled and convenient sales proposition. The Group remains on track to open 60 new branches in the UK in 2021, with further encouraging progress in expanding the European business.

The Plumbing & Heating business continued the positive momentum seen in the second half of last year with two year like-for-like sales up 9.1%. Similarly to the Merchanting business, P&H has seen strength in its smaller, RMI focused customer base with the large contract segment slower to recover.

The Group is experiencing an increasingly inflationary environment, over and above that seen in the second half of 2020, with prices on certain raw material categories, such as timber, copper and steel, rising significantly. At this stage, however, cost price inflation remains manageable. Additionally, the Group has seen availability shortages on some lightside products imported from Asia, as well as some key heavyside products moving onto allocation, albeit this has not had a material impact on trading at this stage. 

Wickes (13 weeks to 27 March 2021) 

Wickes like-for-like sales performance continued to be strong at 19.7% in Q1, 25.6% ahead on a two year basis. The excellent Core performance seen in the second half of 2020 has continued into the current year with Q1 like-for-like sales at 38.5%. This performance was delivered across a broad range of product categories and was driven by Wickes digital capability, with continued high participation of customer delivery and click and collect fulfilment.

With DIFM showrooms remaining closed throughout the quarter, which included the key winter sale period, the recently developed digital DIFM journey enabled Wickes to maximise the opportunity available in the market. Q1 DIFM like-for-like sales declined by (25.0)% on a delivered basis, and orders through the winter sale period were down by around (50)%.

Performance of Core through the Easter trading period remained strong, benefiting from continued positive engagement in DIY and buoyant local trade, together with ongoing restrictions in the wider non-essential retail market, which eased on 12th April.

Source : Travis Perkins PLC

Image : Jevanto Productions / Shutterstock.com 

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