Business is going okay for Travis Perkins in the construction industry; its problems relate to its chain of Wickes DIY stores, a sector already struggling across the board even before a snowy March and April kept DIY-ers out of the stores.
Travis Perkins booked a £246m write-off of goodwill in Wickes in the first half of 2018 and is slashing cost from the business.
The board is now looking at whether it wants to be dealing with the High Street consumer at all.
A comprehensive review of its business has been launched, focusing on “defining a simplified group structure aligned more closely with its core customer base”.
Overall group revenue was up 4.4% to £3,364m for the six months to 30th June 2018. Excludi ng exceptional one-off costs, adjusted profit before tax was £167m.
Chief executive John Carter said: “Our trade focused businesses in General Merchanting, Contracts, Toolstation and Plumbing & Heating achieved good sales growth despite experiencing a volatile first half. These businesses exited the period with encouraging momentum and, supported by a continued focus on cost, they remain on track to deliver modest profit growth for the full year.
“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.”