Travis Perkins, the UK’s largest distributor of building materials and owner of DIY chains Wickes and Toolstation, has become the latest firm to launch a restructuring because of the coronavirus crisis.
The group announced this morning that it has commenced a consultation process regarding the closure of around 165 branches across its overall estate, representing around 8% of its 2,000-strong network. The closures will mostly affect the builders’ merchant businesses, in particular the Travis Perkins chain, focusing on small branches where it is difficult to implement physical-distancing rules, or where marginal profitability will be eroded in a reduced volume environment.
The company also wants to reduce its workforce by around 9% or 2,500 roles. As well as losses from the store closures, Travis Perkins plans to cut jobs in distribution, administrative and sales.
During the lockdown, the group kept a third of its general builders merchant branches open, along with half of all plumbing and heating stores, to support essential construction. Group volumes in May were around 60% of the prior year. This has been improving as more outlets are opened and the group’s weekly volume run rate is now around 85-90% of prior year with its Wickes and Toolstation businesses benefitting from there strong online capabilities.
However, the group stated that it was evident that the UK is facing a recession and this will have a corresponding impact on the demand for building materials during 2020 and 2021.
Nick Roberts, Chief Executive, commented: “Whilst we have experienced improving trends more recently, we do not expect a return to pre-COVID trading conditions for some time and consequently we have had to take the very difficult decision to begin consultations on the closure of selected branches and to reduce our workforce to ensure we can protect the Group as a whole.”
He added: “The Group has a robust balance sheet, strong liquidity position and I am confident that these proposed changes will enable us to trade successfully through this period of uncertainty with a cost base that better reflects the environment we are operating in.”
NAM Implications:
- A move to online has to be at the expense of Bricks & Mortar outlets.
- Whether based on social distancing or profitability (same difference).
- In other words, we are experiencing a reduction in physical capacity, overlap/duplication…
- …everywhere…
- Travis Perkins have the resources to make the transition in evolutionary rather than revolutionary terms…
