Wickes full-year sales up but profits down as it invests in price

Travis Perkins’ profit at an EBITA level fell 2.7% to £63m in the year to December 31 in its consumer division. However, like-for-likes edged up 1% and total sales increased 2.4% to £1.18bn.

Travis Perkins said the consumer division achieved the sales growth “despite a challenging customer environment and inclement weather throughout the first quarter” when heavy snow hit DIY retailers.

The builders’ merchant said Wickes’ investment in lower prices last year through its red pencil price reduction programme and stronger promotional deals led to stronger sales volumes but weaker gross margins.

Wickes strived to offset the margin decline through improved sourcing, changes in the distribution of ordered bathrooms and the removal of the Mycard reward programme.

Wickes’ focus on reducing operating costs enabled it to improve its cost to sales ratio during the year. “Good progress was made in consolidating warehouse operations, improving labour productivity following the introduction of auto-replenishment systems and through the downsizing and sub-letting of oversized shops,” said Travis Perkins.

Wickes relocated or downsized four stores during the year and two new stores were opened. The DIY retailer also introduced new web and mobile platforms to improve the customer experience online.

Travis Perkins reported that Wickes sister retailer Toolstation “had another encouraging year of sales growth and network expansion”. It reported double-digit, like-for-like growth was driven by a “continued focus on customer service, strong availability and investments in ensuring the lowest prices in the market”.

Toolstation has begun opening stores within Wickes, which Travis Perkins said “appear to be resonating well with customers. These implants are helping Wickes drive additional footfall and are contributing to rent costs. Toolstation is benefiting from Wickes’ footfall thereby achieving profitability faster than in many of its new standalone shops”.