Travis Perkins to close 30 branches…

Travis Perkins is to review and potentially restructure the business resulting in a number of branch closures

Travis Perkins is to review and potentially restructure the business resulting in a number of branch closures

Travis Perkins is to close 30 branches, putting 600 jobs at risk.

The UK’s largest builders merchant, which employs 28,000 people and has 2,060 stores across the country, said it was taking the steps due to an “uncertain UK outlook” for next year.

The company’s trading update for Q3 2016, revealed total sales growth of 3.4% across the business, but there were significant losses in the plumbing and heating side of the group.

There was reported total sales growth of 3.8% in general merchanting and 9.1% in consumer business, but the decline in the plumbing and heating division, allegedly due to weak demand, changing customer buying behaviours and the impact of previous government boiler replacement incentive schemes.

This has led Travis Perkins to review and potentially restructure the business to account for these changes.
John Carter, chief executive, said: “Our plumbing and heating results were disappointing and, while market conditions have worsened, we are not satisfied with our performance and will commence reviewing these operations. Our operational focus remains on improving all of our customer propositions, optimising our networks, intensifying our use of space and exploiting the scale advantage we have created.”

The need to prioritise efficiency is the reasoning behind the 30 branch closures, which will affect more than 600 members of staff. However, the company has said that it plans to redeploy many of these people throughout the business, and hopes the final number of redundancies will be lower than 600.

Travis Perkins has opened 20 branches this year, including 11 new Benchmarx and Travis Perkins branches in Q1 2016, alongside 13 branches transferred from Keyline.

The group’s current ‘efficiency programmes’ will also include the closure of ten smaller distribution and fabrication centres and the writing off of legacy IT equipment alongside the branch closures.

“It is still too early to predict customer demand in 2017 with certainty and we will continue to monitor our lead indicators closely,” added John.

“Given this uncertainty we will be closing over 30 branches and making further efficiency driven changes in the supply chain, resulting in an exceptional charge of £40 to £50 million this year.

“We have a proven track record developed over many years of taking swift action to take advantage of opportunities as they arise in whichever part of the cycle we find ourselves. The strength of the group’s balance sheet and the competitive advantage we have created through the investments we have made position us well to continue outperforming the markets we compete in and drive shareholder value over the medium term.”

Travis Perkins experienced one of the biggest drops on the FTSE 100 after the EU Referendum vote, as many predicted severe knock on effects for the construction industry and related sectors. Shares in the company have fallen more than 22% since the referendum.

At the beginning of this month, Wolseley UK announced a major programme to transform the way it serves its customers following a wide-ranging review of its plumbing and heating operations.

The plan, which will result in “significant headcount reductions and branch closures within the business”, has seen figures of 80 branches and up to 800 redundancies given as early estimates.