Investment online and in-store helped Wickes and Toolstation to strong rises in sales and profits during their last financial year – one that is set to be Wickes’ last full-year as part of the Travis Perkins group.
Wickes said more than half of its sales were driven by digital, while 95% involved the store. In-store online ordering
Investment at Toolstation, meanwhile, has meant a new website and new branches – and Travis Perkins says the business will be a priority for further investment.
Both Wickes and Toolstation are Leading retailers in RXUK Top500 research.
The process of demerging Wickes from the group is likely to be completed in the second quarter of 2020 as Travis Perkins simplifies its business to focus on trade customers.
The update came as the Travis Perkins group posted revenues of £6.9bn in the year to December 31 2019, up by 3.2% compared to the previous year. Like-for-like sales – the measure that strips out the effect of store, and business, openings and closures – were up by 3.8%.
Pre-tax profits came in at £180.8m, turned around from a loss of £49.4m a year earlier.
In 2018, a challenging time for parts of its business including Wickes, the group started a programme with the aim of cutting costs of between £20m and £30m by the middle of 2020. Now it says those savings have helped it to mitigate the effect of inflation and of higher salaries that have come as the national living wage rises.
Travis Perkins chief executive Nick Roberts said the group had shown a strong performance against a "challenging market backdrop", with successful action taken to help Wickes recover, while Toolstation’s expansion continued.
"Our strategic progress in 2019 has been significant, but there remains much work to do in order to build stronger foundations for the group to deliver enhanced returns and long-term growth," he said. "Our immediate priorities are the regeneration of the Travis Perkins general merchant, continued growth of Toolstation, further simplification of our business and successful delivery of the demerger of Wickes.
"The long-term fundamental drivers of the group’s end-markets remain strong, and our businesses enjoy leading positions in their respective markets. Whilst trading conditions in 2019 have been challenging we have seen some green shoots of recovery in our lead indicators."
More than half of Wickes sales were driven by digital in its latest full year, with 95% involving a visit to a store, the company said. During the year the retailer developed its digital sales and customer service channels. Online-in-store now allows staff to sell the full online range to customers in-store, either for home delivery or for collection. “This,” said the company in its full-year statement, “enables colleagues to provide a full project service to all customers, whilst maintaining a tight SKU range in store”.
Wickes is set to be demerged from the business by June, and it has previously set out plans to become a “digitally-led service-enabled home improvement business”.
By the end of the year, Wickes traded from 235 shops – after six closures – of which 135 are now in its new-look store format. Wickes has focused on end-to-end service, and more than half (56%) of the kitchens it fitted were fully installed during the year.
By the end of the year, its TradePro loyalty scheme had about half a million members.
Travis Perkins’ retail business currently includes Wickes and Tile Giant, which has 94 stores. This division turned over £1.3bn during the latest financial year, up by 7.4% on the previous year, with like-for-like growth 8.6% ahead. Adjusted operating profits of £97m were 26% up on the previous year.
The results mark a recovery after a challenging year in 2018, and the retailer said it benefited from new ranges in areas including decorating and landscaping, as well as from supply chain improvements that had improved in-store availability. It also benefited as the wider DIY market became less discount-driven.
Travis Perkins says Toolstation is a priority for investment, in line with its company-wide focus on serving trade customers. It is continuing to expand the Toolstation branch network in order, it says, to provide a more convenient service for customers.
Toolstation had 400 branches, as of the year-end, up from 335 the previous year. These include trials of smaller shops in smaller catchment areas. Its European branch network – in which it increased its stake to 97% over the year – had 66 branches, up from 40 the year before.
Online, a new website, launched in December 2018, saw click and collect transactions and conversion rates grow through 2019. The business extended its online and catalogue range by 4,000 products, mostly items that are popular with trade customers in areas including kitchen and bathroom accessories and home automation.
Toolstation revenues of £445m were up by a quarter (+25.7%) compared to the previous year, while like-for-like sales were 16.3% ahead and adjusted operating profits of £25m were 4.2% ahead. The UK only part of the business reported adjusted operating profits of £29m, 20.8% up on the previous year.
Travis Perkins said it was monitoring the potential impact of the Covid 19 virus and would develop its contingency plans as more information emerges.
Image courtesy of Wickes