Wickes & Toolstation outperform the group

The Consumer Division of TP group, consisting Wickes, Toolstation and Tile Giant, outshone the rest of the business in Q3, delivering an impressive +9.1% increase in sales, +6.3% on a like for like basis. Investments in better value, improving range, in the supply chain, in the convenience offered by the growing network of stores and in the delivery service helped both Wickes and Toolstation to materially outperform the market. 

Overall Group sales grew by 3.4% during the third quarter and by 2.0% on a like-for-like basis. Sales for the nine months ended September grew by 4.9% and 2.7% on a like-for-like basis. On a two-year basis like-for-like sales grew by 4.6% during the third quarter and are up 7.6% for the year to date.

General Merchanting sales grew by 3.8% in the third quarter and 0.6% on a like-for-like basis. Total sales growth benefitted from the 11 new Benchmarx and TP branches opened and 13 branches transferred from Keyline in Q1 2016. Despite the volatility in demand seen during July and softer market conditions in August and September margin was well managed and benefitted from the work we have been undertaking over the last two years to provide our branch managers with better information to win business.

Plumbing & Heating sales declined by (3.9)% in the third quarter and by (4.1)% on a like-for-like basis. The combination of weak demand, changing customer buying behaviours and the impact of previous government boiler replacement incentive schemes has meant the plumbing, heating and bathroom markets have been challenging. The operations of the division will be fully reviewed and the outcome of the review and any associated costs will be communicated in 2017.

Contracts’ sales grew by 4.0% in the third quarter and 5.7% on a like-for-like basis. Like-for-like sales growth was higher than total sales growth due to the effect of transferring 13 Keyline branches to Travis Perkins in Q1 2016.

Given that levels of future demand remain difficult to predict the Group has chosen to implement a number efficiency programmes and branch closures to further optimise the network. This work includes the closure of ten smaller distribution and fabrication centres, the write off of certain IT legacy equipment and over 30 branch closures in our trade businesses. All of the 600 affected employees are aware of the changes and as a result the Group will incur exceptional charges in 2016 of between £40m and £50m of which approximately two-thirds will be non-cash write offs. The cash cost of the restructuring is expected to be recovered by the efficiencies generated within 18 months and provide on-going benefits to the Group thereafter.

Read Travis Perkins to close 30 branches

Strategic plan update

The Group is now in the second phase of its five-year plan, first outlined in December 2013, and remains focused on making selective investments to create and extend structural advantages over the medium to longer term. Despite an uncertain market outlook, significant investment opportunities remain to achieve strong incremental returns on capital and underpin continued outperformance in the markets in which the Group’s businesses compete.

Accelerate innovation of customer propositions

TP announces that the Wickes new store format is delivering significant improvements in sales and returns with 12 Wickes stores refitted in Q3 bringing the total number of stores operating in the new format to 50. The multichannel experience has been improved in Wickes with delivery slot of choice now launched and the trial of deliveries within an hour underway. Toolstation has reduced the lead time on Click & Collect and Travis Perkins has launched 2 hour Click & Collect nationwide. Further investments in value, as well as range enhancement and extension in Wickes, Toolstation, Benchmarx and Travis Perkins are delivering both a better customer experience and improved returns for shareholders.

Expand the network and intensify use of space

The TP Group remains committed to expanding its network, principally in Wickes, Travis Perkins, Toolstation, CCF and Benchmarx, as well as through trade parks where a number of businesses can co-locate. These businesses have significant headroom to grow, are delivering strong marginal returns on invested capital and convenience can be further improved for customers through a broader network of shops and branches. In the third quarter the Group opened a net four new Travis Perkins branches, seven new Benchmarx branches, a net three new Wickes stores and nine new Toolstation stores. 

Source: Insight DIY Team

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