December 4, 2018
Wickes owner Travis Perkins has suggested that Wickes, which sells discount bathrooms and kitchens, could be put up for sale as part of efforts to simplify the group’s structure and improve earnings.
In an update to the London Stock Exchange, Travis Perkins said that in the future it would look to focus on serving trade customers and would sell its plumbing and heating divisions.
The firm said: “In the short term, management will also focus on strengthening the performance of Wickes and capitalising on its clear competitive advantages in the DIY, small trade and kitchen and bathroom markets.
“As it is a predominantly consumer-focused business, the board will also look to review the options for maximising the value of Wickes in the medium term.”
DIY retailers have been particularly under the cosh this year as weak consumer confidence, cost price inflation and one of the most competitive pricing environments in years has put household budgets under pressure.
Kitchen and bathroom order volumes were down in the company’s three-month period to end of September compared with the previous year.
Over the past six months, shares in the business have fallen 25%.
In the summer, Travis Perkins said it would conduct a comprehensive review of its business to drive stronger performance and return on investment for shareholders.
John Carter, Travis Perkins chief executive, said: “We have developed a clear plan to focus on delivering best-in-class service to our trade customers, and to simplify the group to reduce complexity, speed up decision making and reduce costs.
“Our trade businesses hold strong positions in attractive markets, and these initiatives will enable us to concentrate our management time and capital in the highest returning areas.
“Our strong balance sheet and free cash flow generation, driven by growing earnings and lower capital expenditure, will underpin our commitment to drive shareholder value and a progressive dividend.”
Travis Perkins said the “heritage” of its business was serving UK trade customers, which it said represented the majority of group activity.
Going forward, it said its aim would be to build on the momentum in its contract merchanting business, expanding Toolstation in the UK and Europe and focusing on “reinvigorating its market-leading” general merchanting business, which it said was a “powerful driver” of performance and cash flows within the group.
Travis Perkins said it was targeting annualised cost savings of between £20 million to £30 million to be delivered over the next 18 months.
It said this cost saving would underpin earnings progression and create a platform to drive cost efficiencies.
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