June 15, 2020 / 8:40 AM / 17 days ago

Travis Perkins to cut 2,500 jobs as recession looms

FILE PHOTO: A worker walks past bricks at the Vauxhall depot of building material supplier Travis Perkins in London, Britain, October 25, 2013. REUTERS/Neil Hall/File Photo

LONDON (Reuters) - Travis Perkins (TPK.L), Britain’s biggest building materials group, plans to cut around 2,500 jobs or 9% of its workforce, warning an impending recession caused by the coronavirus crisis will hit demand for the rest of the year and 2021.

The group, which trades from more than 20 businesses including Travis Perkins builders merchants, the Wickes home improvement chain, Toolstation and Tile Giant, said on Monday it had started a consultation process regarding the closure of around 165 branches, about 8% of its network.

Other jobs will go in distribution, administrative and sales functions.

Shares in Travis Perkins were down 1.6% at 0918 GMT, extending 2020 losses to 34%.

The group said branch closures will be concentrated in the merchant businesses, in particular the Travis Perkins General Merchant fascia, focused on small branches where it was either difficult to implement safe social distancing practices or where marginal profitability will be eroded.

“Whilst we have experienced improving trends more recently, we do not expect a return to pre-COVID trading conditions for some time,” said Chief Executive Nick Roberts.

The group’s sales volumes plunged 40% in May year-on-year but have since recovered to about 85-90% of last year’s levels as more branches have reopened with social distancing measures.

It said there had been particularly strong demand for core do-it-yourself (DIY) ranges at its Wickes stores and at Toolstation, with both businesses showing improving like-for-like sales growth against 2019.

Travis Perkins said that although it had overall liquidity of 763 million pounds ($957 million) it has agreed a relaxation of banking covenants.

Reporting by James Davey; Editing by David Goodman and Paul Sandle

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