Travis Perkins plc (LON:TPK) today releassed Q1 2019 trading update
Positive start to 2019 with Group like-for-like sales growth of 7.3% and total sales growth of 5.4% against a soft prior year comparative
Strong Merchanting like-for-like sales growth of 10.6%
Continued acceleration of Toolstation growth, with 25% total sales growth
Good recovery in Wickes with 10.5% like-for-like sales growth
Given current uncertain market conditions and the early stage of the year, overall expectations for 2019 remain unchanged
John Carter, Chief Executive, commented:
“We have delivered strong sales growth in the first quarter of the year, which reflects both our focus on excellent customer service and the weak comparator in 2018. This performance is all the more encouraging given the impact of the on-going political uncertainty on our end markets.
The Merchanting businesses have maintained the strong growth trend from the end of 2018, and Toolstation continues to grow extremely well, driven by network expansion and existing stores maturing. Wickes posted encouraging sales growth figures in both core DIY and showroom categories, demonstrating a strong turnaround in Kitchen and Bathroom performance. In Plumbing & Heating the milder winter has impacted sales compared to 2018, but our branches and specialist online channels have continued to perform well. The work to operationally separate Plumbing and Heating is progressing to plan and is expected to be completed in Q2.
The actions set out at our capital markets day in December 2018 to deliver best in class service to trade customers and to simplify the Group are well underway. We are making good progress on cost reduction activities and expect to meet our cost reduction targets this year. Overall expectations for the Group in 2019 remain unchanged.”
|Q1 2019 sales growth||Merchanting(1)||Toolstation(2)||Retail(2)||Plumbing & Heating(1)||Group|
|Net new space and acquisitions||(1.0)%||5.9%||(0.6)%||(3.4)%||(1.2)%|
|Trading day differences||(0.9)%||–||–||(0.8)%||(0.7)%|
|Q1 2018 like-for-like(3)||(0.5)%||10.6%||(7.9)%||19.7%||3.0%|
All businesses within Merchanting demonstrated good growth. Travis Perkins generated like-for-like sales growth of 8%, continuing the improving trend from the end of 2018 and primarily driven by sales growth with larger regional and national customers, and through the Managed Services business. The strategy to further empower branch managers is well underway, with experienced managers being supplied with greater access to information, the simplification of pricing systems and more customer focused support from the central functions.
The specialist merchant businesses continue to drive strong like-for-like sales growth, although the on-going political uncertainty poses a risk to the outlook for the commercial construction and housebuilding markets. Keyline continues to perform strongly through its targeted civils and drainage product categories, particularly through direct-to-site deliveries. CCF continues to win market share through market-leading customer service and relationship management, although growth is likely to moderate through the year, partly due to product availability constraints in the supply chain. BSS has maintained the good sales growth momentum from 2018, further leveraging its clear market-leading position. In trade kitchens, Benchmarx sales are growing well, with one additional branch opened in the quarter.
Toolstation continued its impressive like-for-like sales and total sales growth, underpinned by the continued expansion of the store network, alongside the launch of the new website at the end of 2018 and the successful extension of online ranges which are helping to increase sales density. We remain on track to open 60 new stores in the UK in 2019, with encouraging progress in expanding the network in Europe.
Wickes had a strong performance in like-for-like sales and total sales growth from both core DIY and the Kitchens and Bathroom showroom (K&B). K&B benefited from a continued improvement in execution and a strong order book carried over from 2018, partially aided by competitor decisions to exit the design & install service for end-consumers in the second half of 2018. Improved core DIY sales benefited from strong execution, but this was partially offset by the timing of Easter for Q1 (two days of Easter sales in Q1 2018).
As expected, Plumbing & Heating experienced a slowdown in like-for-like and total sales as the weather conditions were notably milder in Q1 2019 compared to 2018. Branch network and specialist online channels showed good sales growth, which was offset by a decline in the wholesale business.
The operational separation of the Plumbing & Heating business from the Group is progressing to plan and is expected to be completed within the second quarter. The Group remains on target to achieve its planned cost reductions in 2019, with significant progress made towards removing the divisional structure above the Merchanting businesses which will reduce complexity, lower the above-branch cost base and speed up decision making.