While the core business of Travis Perkins is providing goods and materials to the building trade, Wickes straddles the trade and the high street, catering for the DIY consumer as much as the professional.
Travis Perkins had considered putting Wickes up for sale after writing off £246m against it last year but has decided instead to demerge Wickes to existing shareholders as a standalone business. The restructuring is expected to complete in the first half of 2020.
By contrast the Plumbing & Heating business remains up for sale and a deal is expected within the next few months.
“The demerger of Wickes is a key component of the overall Travis Perkins strategy to focus on trade customers and to simplify the group which the board believes will underpin the creation of enhanced value for shareholders,” the company said.
“The board believes that Wickes, under a management team led by David Wood, is well positioned to thrive as a stand-alone business. Wickes will have the autonomy to execute on its strategy and allocate capital to its customer proposition and growth opportunities with a clearer focus.”
In the six months ended 30th June 2019 Travis Perkins Group made a pre-tax profit of just £12m on revenue up 7% to £2,771m. This was a considerable improvement on the previous year, when it made a first-half loss of £148m before tax.
Chief executive John Carter said: "I am delighted with the progress the group has made in executing the strategy set out at the capital markets event in December 2018; to focus on our advantaged trade businesses and to simplify the group. The Plumbing & Heating sales process is well underway, and we are today announcing our intention to demerge Wickes as a separate business.
“This strategic progress has been underpinned by a strong trading period in the first half of 2019 albeit against softer trading conditions in H1 2018. Our trade merchanting businesses have outperformed their markets, through continued focus on delivering excellent customer service, and benefitting from the leaner, lower cost organisation now in place. Toolstation continues to deliver excellent growth through proposition improvements and network expansion. Wickes has delivered a strong turnaround in volume and profit performance, with gains in both core DIY and through the Kitchen & Bathroom showroom.”
He concluded: “Whilst our underlying markets remain subdued, the self-help initiatives underway are supporting an encouraging improvement in performance and provide a strong platform to drive sustainable growth ahead of our markets in the medium term. Despite a cautious outlook for the near-term, the group remains confident in making progress across the year as a whole."