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The parent company of DIY retailer Wickes, Travis Perkins, has announced that profits “will be lower than previously expected” amid a “challenging DIY market”.
For the six-month period ending June 30, Travis Perkins reported a 4.4% increase in revenue to £3.3bn, attributed to good trading performance in the trade-focused businesses in general merchanting, plumbing and heating, contracts and its Toolstation brand.
However thanks to difficult conditions in the DIY market and a £246m impairment of goodwill for its Wickes fascia, adjusted profit before tax dropped 4.6% to £167m, and adjusted operating profit also dropped 5.8% to £179m.
Travis Perkins also said adjusted operating profits decline of 5.8% was “primarily” down to weaker kitchen and bathroom showroom sales at Wickes, and higher operating costs in general merchanting.
CEO John Carter said that general merchanting, plumbing and heating, contracts and Toolstation achieved good sales growth despite experiencing a volatile first half but exited the period with “encouraging momentum” and, supported by a “continued focus on cost” remain on track to deliver profit growth for the full year.
He said: “Our consumer-focused business, Wickes, has had a far more challenging period as weaker consumer spending trends, combined with a difficult competitive environment, have held back profitability. Consequently, the Wickes team is executing a significant cost reduction programme.
“Whilst these savings will help drive improved profitability through the second half of the year, Wickes’ profits will be lower than previously expected. Against a backdrop of changing market conditions which are expected to continue for the foreseeable future, the group has commenced a comprehensive review of its business, with a view to driving stronger performance and enhanced value for shareholders in the medium term.”
