Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
magazineTravis Perkins outlines new streamlining plan
TRAVIS PERKINS (TPK) £11.30
Gain to date: 11.3%
Original entry point: Buy at £10.15, 30 April 2020
The latest trading update from building supplies firm Travis Perkins (TPK) was upbeat on current trends in its industry, but less positive than hoped on the outlook for the UK economy in general and its end markets for the rest of this year and 2021.
While average weekly business volumes are almost back to normal for the group this month, there is a gap between Wickes and Toolstation which are seeing higher like-for-like sales and the Merchanting, Plumbing and Heating businesses where volumes are still some way below last year’s levels.
The firm has taken the tough decision to close 165 branches, mainly in the General Merchanting division, with the loss of up to 2,500 jobs or 9% of the workforce. Cuts will be focused on smaller branches where safe distancing is difficult or where lower volumes will impact overall profitability.
Travis still has ample liquidity, with £363m of cash and £400m of undrawn bank lending, and while laying people off is never pleasant it should ensure the business is streamlined and competitive in what it believes will be tough times ahead for the building industry and suppliers.
SHARES SAYS: Travis has grasped the nettle in order to emerge stronger. We are still buyers.
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
