Travis Perkins’ retail division, which largely comprises Wickes, saw like-for-likes drop 8.8% in its first half as the business plots its first overseas expansion, in the Netherlands.
Turnover rose 14.5% to £587.5m in the six months to June 30, driven by its Toolstation business and Wicke’s acquisition of 13 former Wickes stores.
Profit before property growth in the division rose from £18.2m to £27.5m.
Travis Perkins said: “We have taken our first small step in overseas markets, having signed heads of terms to invest in the five branch Dutch franchise of Toolstation.
“We will be working with the founder of the UK Toolstation business to develop and test the robustness of the model before determining its suitability for a wider expansion in the Euro area.”
The business said that the wet weather in July affected sales, with like-for-likes down 2.7%.
Travis Perkins said that savings in staffing costs at Wickes had benefited the retailer as a result of the “simplification” of the store team structure. Monies generated from sub-letting parts of stores to other retailers also generated significant revenue.
Sales in Wickes rose as a result of the new stores acquired last year, which have traded significantly ahead of the targets, the company said.
Wickes said: “Whilst our new stores have given us more market share, the like-for-like estate also increased its market share from 2011 levels despite our competitors getting a greater sales benefit from the closure of Focus in May 2011.
“Gross margins before the impact of the lower gross margin Toolstation business (which reduces divisional gross margin by 0.5%) have improved by 1.6% through a combination of price control, better sourcing, improved terms and sales mix net of selectively targeted investment in pricing in some product areas.”
Good cost control has been exercised by the consumer division team in the half. The ratio of overheads to sales has remained flat despite lower like-for-like revenue and a high proportion of fixed costs.
Wickes has also relocated a number of stores to smaller sites.
Toolstation has performed strongly and profits continue to grow. Year-on-year total sales were up 35.8%, with like-for-like sales growing strongly. The retailer opened 11 stores in the first half, taking the total up to 114.
Travis Perkins chief executive Geoff Cooper said: “Our strong market positions, track record in managing through the cycle, and overall leading scale in building materials leave us better positioned than competitors to deal with the uncertain outlook.
“Based on current information, we are happy with consensus expectations for our 2012 financial performance.”
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