Travis Perkins trading beats expectations

Steve Dinneen
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BUILDING and home improvements retailer Travis Perkins said it was trading ahead of expectations, with signs of growth in its merchanting business offsetting a contracting DIY market.

The group, which is seen as a building industry bellwether, said like-for-like sales increased 1.4 per cent in the four months to the end of April, rebounding from a fall of 2.7 per cent in the first seven weeks of the year.

The improving sales trend at the firm, which trades from about 1,300 branches across the UK under Travis Perkins, Wickes and other brand names, continued in the first half of this month.

Like-for-like sales in the merchanting division increased 2.8 per cent, driven by increased activity in the new housing market, with gross margins “slightly lower” year-on-year.

In the retail division like-for-like sales fell 1.7 per cent although gross margins were maintained.

Chief executive Geoff Cooper said: “Current trading is ahead of management expectations, helping us to make inroads into the adverse effects of the weather-affected first two months of the year.

“But everyone is concerned about a VAT increase and what that might do to consumer incomes. I don’t think it’s inevitable, I think it’s likely.”

Analysts at Numis upgraded their pre-tax profit forecast for 2010 by five per cent to £193m, up from the £180m made in 2009.

One said: “We argue that Travis will be an early cycle beneficiary within the sector.”