Travis Perkins to sell Wickes and focus on trade customers

Kitchen and bathroom retailer Wickes is to be sold by its owners, bosses have confirmed.

Parent company Travis Perkins, which sells building materials to traders, said it wants to simplify the group and focus less on selling to the general public.

Bosses also revealed the firm has spent £50 million stockpiling extra products to ensure there are enough building materials available in the event of a no-deal Brexit.

But investors will be particularly interested in the Wickes deal, which could net shareholders in Travis Perkins between around £400 million and £500 million when sold next year.

The company said: “The demerger of Wickes is a key component of the overall Travis Perkins strategy to focus on trade customers and to simplify the group.”

It will cost £3.5 million in fees and IT separation costs, the firm added.

Like-for-like sales at Wickes grew 9.7% in the six months to June 30, compared with the same period a year ago. But 2018 had been particularly difficult, so the comparison was a weak one.

Revenues at the retail division, which also includes Tile Giant, rose 8.9% to £695 million and adjusted profits were up 48.6% to £52 million.

Travis Perkins added: “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.”

The main area of expansion in the business will be in its Toolstation brand, with 21 new branches opened in the last six months.

Sales at Toolstation grew 23.1% to £208 million, with adjusted pre-tax profits of £13 million for the period, compared with £10 million a year earlier.

Bosses admitted its Keyline business had a tough period, and that the disposal of its ecommerce business Built cost £12.6 million.

On Brexit, the company revealed that it increased its inventory of stock by £50 million “in anticipation of the UK’s potential exit from the EU in the spring”.

It added: “This elevated level has been maintained given the delay in the UK’s expected departure from the EU, and the group will make decisions on the optimal level of inventory to protect customers’ access to materials.”

Overall, revenues rose 6.9% to £2.77 billion, with pre-tax profits of £20.8 million compared with a £115.6 million loss during the same six months a year ago. On the company’s preferred profits measure, which strips out certain costs, they were up 14.7% to £195 million.

Bosses added that they were on track for annual cost savings of £20 million to £30 million by next year, and hope to benefit from “the continued underinvestment in the repair, maintenance and improvement of the existing, ageing housing stock.”