This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Travis Perkins (LON:TPK) posted a solid third quarter (Q3) group sales growth of 3.9%, with its combined builders merchant businesses – General Merchanting, Contracts and Plumping and Heating – achieving like-for-like growth of 7%.
However, its positive performance was offset by its home improvement subsidiary Wickes, which struggled as UK consumers spent less on DIY and the market at large continues to face significant pricing pressure, the company said.
‘The Group delivered a solid Q3 trading performance, in line with expectations,’ Travis Perkins CEO John Carter said. ‘Our trade-focused businesses delivered good sales growth against a challenging market backdrop, including successful recovery of cost price inflation.’
‘The UK DIY market continues to be very challenging for Wickes, where significant price pressure and weak consumer confidence is providing a tough trading backdrop.’
‘Across the Group, we are making good progress with the cost reduction activities that were highlighted in July, and these actions are generating positive results and underpin our confidence that our full-year performance is on track and in line with market expectations,’ he added.
Wickes ‘challenging’ DIY market
In the UK, the DIY market continues to pose a major challenge for Wickes, with the home improvement company continuing to see trading volumes decline in both its core business and its kitchen and bathroom showroom categories, the company said.
Making matters worse, the company is also having to deal with significant pricing competition across the DIY market, which has stopped the business from adequately recovering from cost price inflation, even though Travis Perkins acknowledged that pricing pressure has started to calm down in recent weeks.
In an attempt to address the challenges posed by the market, Travis Perkins has embarked on several cost-saving measures, with particular attention paid towards reducing distribution costs and applying tighter controls on overheads.
Data on secondary housing transactions, house prices and consumer confidence continue to ‘paint a mixed picture’ with Travis Perkins remaining cautious in its outlook over the near-term. However, despite a difficult DIY market, the group is confident that its full-year performance will remain on track and in line with market expectations.
Toolstation hammers out solid growth for Travis Perkins
Elsewhere, the group’s UK and EU direct sale and online supplier of trade tools, Toolstation, continues to post strong like-for-like growth and total sales growth, supported by product range extensions that have served to increase the company’s sales density.
Off the back of the company’s success, Travis Perkins remains committed to opening an additional 40 stores by the end of 2018, the company said.
.jpg)
