Travis Perkins PLC has reported on 2018 trading, advising of a ‘solid performance’ against a market backdrop of considerable uncertainty. Group sales growth was strong, with overall growth of 4.8% to £6,741m, and growth of 4.9% on a like-for-like basis.
Consumer Division performance (Wickes, Toolstation and Tile Giant)
Toolstation UK – Financial performance
Toolstation revenue grew by 18% in 2018, and by 11.4% on a LFL basis. Sales growth was driven by the continued expansion of the store network, existing stores continuing to mature, and through the extended ranges available to customers on a next-day basis.
Adjusted operating profit was broadly flat year on year, as anticipated, as additional volume growth was offset by investment in the higher operating costs associated with the 40 additional stores and a new distribution centre which will support further network expansion.
Gross margin was unchanged, despite maintaining Toolstation’s value leadership position.
An additional 4,000 products were added to the range, with a key focus on trade relevant ranges, with an extra 58 trade brands added, contributing over £25m of additional sales. The product range available for next-day delivery or dropship was also extended, with categories including bathrooms, garden sheds and radiators. A trade credit card was launched in 2018 providing small trade customers with access to up to 116 days of credit on purchases in Toolstation and other Travis Perkins brands.
Development of IT systems continued, with a new EPOS system implemented in store, and a new website launched in December 2018, alongside providing 6-day deliveries to customers. Multichannel transactions increased by over 30%, with strong growth in click and collect, and the new website has improved conversion rates by >1%.
A third distribution centre was opened, increasing capacity to over 500 stores. 40 new stores were opened in 2018, including the successful trials of smaller format and high street concepts, with branch performance in line with expectations.
The expansion of Toolstation Europe continued, with 12 stores opened in the Netherlands taking the total to32, and supported by a new distribution centre. Growth characteristics for both stores and online are extremely encouraging,and mirroring the experience of the UK business. A further five stores were added to the network around Lyon in France, bringing the trial up to 8 in total and developing brand recognition with local trade customers. The Belgian website continues to develop well, and some trial stores will be added in 2019, to be serviced from the Dutch distribution centre.
John Carter, Chief Executive Officer, commented:
“The Group delivered a solid performance overall in 2018 despite a challenging market backdrop. We took concerted self-help actions during the year, and the benefits of this cost reduction, together with improved trading, drove an improved profit performance in the second half of the year.
“In December 2018, we set out our intention to focus on delivering best-in-class service to trade customers and to simplify the Group. To that end, removing the divisional structure within Merchanting will enable an increased focus on customers at a business unit level, speed up decision making and, at the same time, reduce costs.
“In the longer term, the Group remains focused on generating sustainable profitable growth for shareholders and we will achieve this by allocating capital and resources to our most advantaged businesses. We are making good progress on the preparation for the disposal of the Plumbing & Heating division, and are seeing an encouraging improvement in trading and good momentum in Wickes.
“Whilst we remain positive about the long-term outlook for our end markets, we are planning for uncertain market conditions to continue in the near term. The Group remains focused on self-help actions to underpin performance in the near term, whilst continuing to invest for the future.”
Source : Travis Perkins Plc