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Toolstation Reports 4% Like-For-Like Sales Increase

Toolstation - New Malden Store Front

Travis Perkins plc, a leading partner to the construction industry, announces its unaudited full year results for the year to 31 December 2023.

  • A challenging year in weak market conditions; driving actions to support profit recovery and enhance cash generation

For Group results, click here

For the Travis Perkins plc FY2023 results presentation, click here 

 Toolstation

 

2023

2022

Change

Revenue

£826m

£775m

6.6%

Like-for-like growth

4.0%

(3.7)%

 

Adjusted operating profit - UK

£23m

£21m

9.5%

Adjusted operating profit - Europe

£(37)m

£(30)m

(23.3)%

Adjusted operating profit - Total

£(14)m

£(9)m

(55.6)%

Adjusted operating margin

(1.7)%

(1.2)%

(50)bps

ROCE

(2)%

(2)%

-

Store network (UK)

570

563

7

Store network (Benelux)

119

113

6

Store network (France)

51

45

6

Note - all figures above exclude property profits

Toolstation made good progress during the year with 6.6% sales growth demonstrating the businesses’ ability to win share in difficult markets.

In the UK, where sales grew by 5.3%, network expansion was limited in the year to a net seven new stores reflecting a combination of market outlook, significant investment in the network in recent years and management focus on the opening of the new distribution facility in Pineham, Northamptonshire. Pineham opened in Q3 with 500,000 square feet of capacity and semi-automation technology providing distribution capability as the business grows over the next decade. As a result of Pineham coming on-line, the Bridgwater distribution centre was closed in Q2 2023. A further review of the retail distribution network proposed closing the Daventry distribution centre which was announced in Q1.

UK adjusted operating profit grew by 9.5% to £23m which included around £13m of higher operating costs related to start-up and dual running costs at Pineham. Management expects to recover these costs over the next three years as supply chain efficiencies come through.

In September the Toolstation UK management team set out their vision for the future of the business at a Capital Markets Update with the ambition to grow revenue to £1bn by 2027 with operating margin increasing to around 8% through scale efficiencies and margin enhancement opportunities. The materials from the event can be accessed via the following link:

https://www.travisperkinsplc.co.uk/investors/results-reports-and-presentations/?year=2023

Toolstation Europe

France 

Toolstation France delivered sales growth of 29% in the year but losses increased to £(18)m as six new stores were added alongside further investment in infrastructure. 

Despite some positive progress in the past year, the business in France faces long-term challenges which significantly increase the time and investment needed to achieve profitability. These challenges include: 

  • Building brand awareness
  • Serving the trade in a less populated region
  • Ongoing weak end-market demand

Taking these factors into consideration, and with forecast losses expected to increase to £(20)m in 2024, management has concluded that the investment required to reach profitability is no longer sustainable and today confirms that it is working on a plan for a potential exit of the business. Any decision would be subject to a prior consultation process with the relevant employee representatives.

Benelux

Although sales grew by 11%, performance overall in Benelux in 2023 was significantly below management expectations with a loss of £(19)m in the year (2022: £(15)m). The increase in losses was a result of weak gross margins, cost inflation and the additional costs of the second distribution centre alongside six new stores. 

Management expects losses to narrow to around £(12)m in 2024 in Benelux and now anticipates that the Netherlands business will reach break-even point, on an annual basis, by 2025 with Belgium forecast to break-even by 2028. With end-market conditions expected to remain challenging in the near term and the extended period to reach profitability, management has commenced a strategic review of both businesses and will provide a further update as soon as the review is concluded.

Property

The Group generated property profits of £15m in the year, with £67m of cash proceeds. The main transaction in the year was the sale-and-leaseback of seven sites in March 2023 for £23m.

The Group continued with its policy of reinvesting freehold sale proceeds with the purchase of a 6.25 acre industrial site in Selsdon, near Croydon for £22m the major purchase during the year

Source : Travis Perkins plc

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05 March 2024

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