Both Wickes and Toolstation today reported a rise in first-quarter figures – but parent company Travis Perkins said its business was hit by the lockdown as the second quarter started. Travis Perkins says it has run a “service-light” sales model since government measures were brought into place to reduce the spread of coronavirus – and that in the first three weeks of April, total group revenue was about a third of that reported in the same period in 2019.
In the three months to March 31, total group sales fell by 4.6% (-3.8% LFL) – but sales were up in both its Wickes retail business (+3.5%/+4.5% LFL) and its Toolstation trade counter business (+31.1%/+9.1% LFL).
The builder’s merchant group said that it had kept branches at all of its businesses open through the pandemic through an operating model aimed at keeping customers and staff safe. Customers have been served through remote, non-contact sales channels including direct delivery and call and collect. That has in turn enabled the business to provide services and support to keep infrastructure maintained – including the building of NHS assets including the Nightingale hospital network and national infrastructure maintenance.
Despite that, half of its 30,000 staff were furloughed on full pay during the first three weeks of the pandemic. Members of the business’ board of directors and group leadership team are to take a voluntary 20% cut in pay from May 1 for three months. The business rates holiday also means the group is saving about £90m a year, and it is also talking to landlords to move rent payments from quarterly in advance to monthly in arrears. Despite these measures, the group spent £50m in overheads during the first month of lockdown. It has fully drawn on its £400m lending and has £522m cash in hand.
The figures came in a trading update ahead of the Travis Perkins annual general meeting.
Travis Perkins chief executive Nick Roberts said: “We continue to adapt our operations, applying stringent social distancing and using technology to enable contactless operations, and we are therefore able to respond to the government’s call to ensure that the construction industry can continue to deliver on crucial programmes and projects and be an engine for future economic recovery.
“As we move forward we will continue to adjust our operations, with our foremost priority to keep colleagues and customers safe and the industry supplied with the materials it needs.”
Commenting on the figures, Georgina Sreeves, associate retail analyst at GlobalData, said: “Wickes has proved slightly more resilient within the group, owing to increased demand as consumers looked to make home improvements. However, serving customers solely through non-contact channels has significantly reduced sales.
“Kitchen and bathroom design and installation services at Wickes, which contribute around a third of sales, remain closed alongside its stores. Branches are still being used as fulfilment centres for online delivery and click-and-collect orders, and strong demand has led to imposed online queues on its website.
“Although Wickes is classed as an essential retailer, Travis Perkins did not mention stores reopening in the near future. As its competitors, B&Q and Homebase, begin to reopen their store networks with social distancing measures, Wickes is likely to see a slowdown in online sales as customers migrate to physical stores for immediate fulfilment. GlobalData forecasts that in 2020, the UK DIY and gardening sector will decline by 10.5% on 2019. Wickes must adapt its stores and open with social distancing measures to ensure it does not fall behind its major rivals.”
Image courtesy of Wickes