I pray you bear me henceforth from the noise and rumour of the field, where I may think the remnant of my thoughts in peace,
Were Travis Perkins’ eyes bigger than its stomach back in May 2010 when it bought the BSS group and became the building and plumbing merchanting behemoth it is today? Has the time now come for an enforced diet?
OK, maybe that analogy doesn’t really work, but the news that TP are planning on putting its whole Plumbing and Heating division on the market ahead of the mixed bag that Wickes has become makes for interesting times.
Something had to be done. Travis Perkins, for so long the darling of the City (in terms of this industry anyway) for its gross margins and tight controls has been a bit wobbly of late. It’s been beset by issues with the DIY sector for certain but the It’s been clear from the headlines throughout the past couple of years that not every area was working as well as it should. When you fall out of the FTSE 100 and are the worst performing share in the FTSE 350 as TP was back in the Summer, you have to do something. This isn’t an independent family-run firm that has the luxury of being able to duck and dive, tighten its belt and play the long game. This is the UK’s largest builders merchanting group plc and as such is beholden to the City and its institutional shareholders.
In the same way that Wolseley realised that its strength lay in its plumbers merchant arm, Plumb Center and its allied parts, civils and drainage division rather than the general merchant Build Center, so Travis has decided to stick to what it knows it does well: the Travis Perkins, Keyline, CCF, Benchmarx and Toolstation etc will stay, PTS, CPS, F&P and the rest of the plumbing and heating division will go – so too in time will Wickes.
Rather like a householder who decides to spruce their property up before sticking it on Rightmove, TP has realised that its massive restructuring of plumbing and heating of the past few years means that the division is now in a leaner, more efficient state, an ideal candidate to be put in the estate agent’s window. Wickes is still firmly in the fixer-upper category.
Who’s going to put their proverbial hat in the ring for the P&H division? When the fourth largest plumbers merchanting operation in the UK isn’t one of the Big Four, but Screwfix (and someone who really, really knows the market told me that!), you know that the whole balance of power is shifting. ? When the majority of the products you sell can be packaged up into neat, easily stackable boxes and put on a DHL van, you know that Amazon are hovering. (in the US they are there already).
Is this the only division of its type in this industry that is open to offers? I don’t think so. I know so. There’s a lot of private equity sniffing round at the moment. Could this be the opening that an outsider – Amazonian or otherwise – needs to get a toe in the UK lightside market?