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Wickes and Toolstation look likely to emerge relatively unscathed from Travis Perkins closures and job cuts

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Wickes and Toolstation are both seeing their sales start to recover thanks to strong digital capabilities, parent company Travis Perkins said today. Both retailers today looked likely to emerge relatively unscathed from Travis Perkins’ decision, announced today, to consult on cutting up to 2,500 jobs across its business as it closes 165 branches. The closures come as a recession seems certain to follow the partial closure of the economy in order to protect against the Covid-19 pandemic.

Altogether, said parent company Travis Perkins in a trading update today, sales volumes in May were at about 60% compared to the same time last year, with weekly volumes now standing at about 85% to 90% of last year’s figures. Both Wickes’ DIY ranges and Toolstation’s trades counters were “demonstrating improving like-for-like growth versus 2019, with performance underpinned by their strong digital capabilities”. 

However, volumes in the builders’ merchant and plumbing and heating businesses are at around 80% of the previous year, with plumbing and heating recovering more slowly since this area requires tradespeople to work in customers’ homes. Travis Perkins says it now sees a recession ahead, with a “corresponding impact” on the demand for building materials. As a result, it says, it is taking “regrettable but necessary actions to preserve the future competitiveness of the business”.

The business is consulting on closing about 165 branches – representing about 8% of its network and is also consulting on head office jobs in distribution, administrative and sales roles. Overall, staff numbers are likely to be reduced by about 2,000 or 9% of the workforce. Most of these will involve the builders merchant branches, especially small branches where it is difficult to implement safe distancing while remaining profitable. 

Travis Perkins chief executive Nick Roberts said: “The Covid pandemic has created significant challenges across our group and I have been hugely encouraged by the flexibility of our colleagues to adapt our business models successfully and at pace, which has enabled us to maintain safe working practices whilst continuing to provide an effective service to our customers.

“Whilst we have experienced improving trends more recently, we do not expect a return to pre-Covid trading conditions for some time and consequently we have had to take the very difficult decision to begin consultations on the closure of selected branches and to reduce our workforce to ensure we can protect the group as a whole. This is in no way a reflection on those employees impacted and we will do everything we can to support them during this process.

“The group has a robust balance sheet, strong liquidity position and I am confident that these proposed changes will enable us to trade successfully through this period of uncertainty with a cost base that better reflects the environment we are operating in.” 

Travis Perkins said it had £363m in cash, giving it total headroom of £763m, including £400m in available credit. 

Wickes and Toolstation are both ranked Leading retailers in RXUK Top500 research.

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