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Wickes mops up sales left by demise of MFI

Published: 31 July 2009
Kitchens and bathrooms turnover revealed to be up 16.6% in latest interim statement, while merchanting sector continues to "suffer".
Wickes mops up sales left by demise of MFI
Parent company Travis Perkins revealed a strong kitchen-led retail performance in its interim results for the six months ended June 30, 2009. DIY chain Wickes experienced a 16.6% surge in turnover for the sector, benefiting from a substantial chunk of revenue freed up in the market following the demise of competitors such as MFI.

Overall Wickes' like-for-like (lfl) turnover for the first half was down 2.4% per trading day. Core products were also down 5.9%.

The statement explained that, boosted by good weather, the DIY market has "exhibited its best rates of growth in seasonal and 'soft end' products", although Travis Perkins businesses have a relatively low market presence in this sector.

Revenue for the Group was down 13% for the six-month period, with pre-tax profit experiencing a 27% decline.

Also part of Travis Perkins' retail division, Tile Giant, which the Group acquired in November 2007, saw a lfl turnover decline of 15.2%, with an improving trend towards the end of the first half. Travis Perkins has continued to grow the chain, adding two new outlets during the six-month period, taking Tile Giant's total to 80 stores at the end of June.

Turnover in its merchanting division, which includes Travis Perkins, Keyline, CCF and City Plumbing, was down 17.8%. Earnings before interest and tax decreased by 32.7% to £83.9m, while lfl turnover per trading day was down 18.5%.

The company explained that its trade customers at the heavier end of the market "have suffered more" than it forecast, stating that the "continuing fall in commercial, warehousing and industrial projects has surprised even the most pessimistic commentators."

However, Travis Perkins has performed better than expected against the background of what the Group described as "the most severe recession in our sector for many years". It has reduced its net debt by £491m and made cost savings of £60m, which is £10m more than its original target.

Group chief executive Geoff Cooper said: "Although some signs of stability in our markets have appeared recently, there remain short-term risks on the downside.

"The Group has performed ahead of our expectations in these testing market conditions. We have cut costs, traded well and generated strong free cash flow. This has produced good operating margins, and together with the strengthening of the balance sheet, has significantly reduced net debt."

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