Wolseley is set to close down 200 branches in the UK and Ireland ‘in the next few months’, which will have severe ramifications for the trade counter sector.
Wolseley is the world’s largest trade distributor of plumbing and heating products and operates about 1,900 branches with 13,500 staff in the UK and Ireland under brands including Plumb Center, Build Center, Hire Center and Parts Center, as well as Unifix and Bathstore.
However, in its Interim Management Statement issued today, Wolseley announced a programme of cost reductions to reduce annual costs by at least £80m.
It will be phased over ‘the next few months’ and when completed is expected to result in headcount reductions of around 2,000 employees and over 200 branch closures.
In the three months ended 31 October 2008, revenue for the UK and Ireland decreased by about 10% with trading profit down by around 65%. In the statement, Wolseley said that in the last quarter it was being affected by the ‘unprecedented events in the financial markets and their wide ranging impact on the housing market and consumer sentiment’.
It added that the ‘heavyside building materials’ brands such as Build Center and Brooks (Ireland) continued to be affected by the rapid deterioration in new residential construction. ‘Lightside’ plumbing and heating brand Bathstore, which is geared to consumer markets, was said to have reported ‘a significant deterioration in revenue in the first quarter’.
However, Plumb Center continued to show resilience, the report said.
Chip Hornsby, group chief executive of Wolseley, said: ‘While these results reflect a further deterioration in the business environment in the first quarter it was not unexpected, and, we continue to react swiftly to market conditions with aggressive but measured cost reduction. In these unprecedented circumstances, the key priorities remain driving cost reduction and enhancing cash flow to ensure the Group remains compliant with its banking covenants.’