Wickes and Toolstation owner Travis Perkins has suffered a fall in profitability within its retail division amid an “increasingly challenging” UK DIY market.
Adjusted operating profit in Travis Perkins ‘consumer’ arm tumbled 18.8% to £82m in the year to December 31, despite a 4.7% uplift in revenues to £1.59bn.
Sales performance was boosted by a 3% increase in like-for-likes across the 12-month period.
But Travis Perkins blamed a “higher operating cost base in Wickes” and a “disappointing” autumn promotion in kitchens and bathrooms for the drop in profits.
Travis Perkins said it implemented “a different promotional methodology” during September and November in a bid to drive sales, but admitted it had been “unsuccessful”.
The business insisted, however, that its showroom promotional activity in kitchens and bathrooms had since been “refined”, sparking a “stronger start” to 2018.
In contrast, Toolstation’s growth outpaced that of its sister retailer.
Travis Perkins said the chain’s sales surpassed £300m in 2017 after “accelerating” like-for-like growth in the second half of the year and the opening of 40 new stores.
The group added that it plans to open 40 more Toolstation stores in 2018, but said its programme to open new Wickes stores and refit existing sites has been “slowed” in 2018 amid the “challenging” DIY market.
It refurbished 27 Wickes sites last year, but said it would “tightly control overhead costs” in 2018 as it faces into rising wages, business rates and depreciation.
The wider Travis Perkins group, which also includes plumbing and heating, contracts and general merchanting divisions, suffered a 10% drop in pre-tax profit to £343m.
Its chief executive John Carter said: “2017 was a challenging year for the group, with continuing uncertainty in our end-markets, and declining consumer confidence throughout the year.
“The main focus for our businesses has been to recover the significant cost price inflation encountered and on the whole, this has been achieved successfully.”
Carter added that the consumer division was “held back” by “disciplined investments in our customer proposition”.
Looking ahead, he said: “We anticipate that the mixed market backdrop will continue. As a result, we will be focusing capital investment behind our key priorities, and slowing investments elsewhere.
“The group will focus heavily on maintaining tight control of the cost base and expects 2018 performance to be similar to 2017.”