Builders’ merchants Travis Perkins made a pre-tax loss of £126.6m in the first half of 2020 after it forked out more than £100m closing branches and cutting jobs
Travis Perkins made the decision in June to shut down 165 branches and let go of 2,500 staff.
The group made an encouraging start to 2020 with revenue growth of 2.4% in the 11 weeks to 18 March. However, as the impact of the pandemic spread to the UK and the lockdown period was implemented, overall revenue in the half declined by 20% to £2,781m and by 19% on a like-for-like basis.
Given the largely fixed cost base in the business, the revenue decline had a significant impact on group profitability, resulting in an adjusted operating profit of £42m.
In the first half, as a direct result of the challenging trading conditions, Travis Perkins’ recognised higher provisions in relation to holiday pay, slow-moving stock, rebates, and timing of customer credit account settlement, up to £20m of which may be recovered if the recovery in trading continues through the second half of the year.
Largely due to the company’s restructuring actions, the group delivered a statutory operating loss of £92m.
The restructuring is anticipated to provide operating cost savings of £120m a year in the future.
Nick Roberts, chief executive officer at Travis Perkins, said: “Throughout the pandemic, the health and safety of our colleagues and customers has been our primary concern.
“Customer interactions have changed significantly resulting in changes to the way we do business, from increased activity through digital channels through to alterations to our physical store formats in order to maintain safe working practices.
“Although our financial performance in the first half of 2020 was impacted by the Covid-19 pandemic, and we have had to undertake a restructuring programme in light of the challenging outlook for the group’s end markets, we have made significant strategic and operational progress against the four strategic priorities we outlined at our full year results in March 2020.
“Although considerable uncertainty around the impact of the Covid-19 pandemic remains, the actions we have taken to adapt and innovate in our businesses mean that the group is well placed to continue to service our customers, support our colleagues, outperform our markets and generate value for our shareholders.”