Plumbing and heating merchant chain Wolseley UK is to close 80 branches with the loss of 800 jobs in a £100m restructuring.
The restructuring affects only the plumbing and heating divisions; the civils, utilities and infrastructure businesses in the UK are unaffected by the review.
The group said that the aim is to make Wolseley UK the “first choice specialist for trade customers delivering the highest levels of customer service in the industry coupled with a leaner, more efficient operating model which will significantly improve service levels, product availability and choice.
The plumbing & heating business is to be restructured into a local network of approximately 450 branches and a national network of around 80 larger branches, open seven days a week
The next step is a period of consultation with employees at affected sites. “Overall, the reorganisation will take two to three years to complete and is expected to deliver annualised cost savings of £25m to £30m,” the company said. “It is too early to provide details of which branches will close, either by region or brand identity.”
However, the Worcester distribution centre is likely to be closed. “The reorganisation of our logistics and supply chain network, which we plan to complete over the next two years, will result in lower overall capacity requirements in our UK supply chain,” the company said. “This will enable us to operate from three regional distribution centres in the UK instead of four which will significantly reduce our operating costs. On this basis, we propose to assess the feasibility of our Worcester DC as the changes in our plan are put in place.”
Patrick Headon, managing director of Wolseley UK, said: “We have put the customer at the heart of this review with the aim of making Wolseley the first choice specialist merchant in our chosen markets. We have a great business in the UK and there are continued opportunities for growth. I’m confident the transformation programme will drive better customer service and employee engagement and improve our financial returns.
“The trends in our profitability have been disappointing and we need to take action to improve our customer proposition and the efficiency of our business. We have an outstanding team made up of hard working and dedicated people across the UK and we are very conscious of the impact this transformation of the business will have on some of them. We are therefore committed to carrying out this programme as sensitively as possible, using voluntary means to achieve the proposed headcount reductions wherever possible. Over time I’m confident our proposals will benefit both our colleagues in the UK and the customers they serve every day.”
Wolseley generated £1,996m revenues from its UK activities in the year to 31st July 2016, up just 0.5% on 2015. Trading profit for the year was £74m, down 17.8% on the previous year.
By contracts Wolseley’s US operations saw revenues grow 6.2% to £9,456m for the year and trading profit by a similar percentage to £775m.
John Martin, group chief executive, said: “Our review of UK operational strategy has identified opportunities to transform our customer propositions while simplifying our branch network and supporting logistics facilities to greatly improve service levels.
“Regrettably this will result in job losses which we will handle sensitively and minimise through redeployment and attrition as far as possible.”
Wolseley also plans to spend £40m over three years refurbishing branches and stepping up investment in digital tools.