U.K. Plumbing Supplier Wolseley to Cut 800 Jobs, Branchesby
Plumb Center owner to shut 80 of 750 outlets in U.K.
U.S. sees strong residential demand; Nordics under review
U.K. building and plumbing supplies distributor Wolseley Plc will cut as many as 800 of 6,000 jobs and close more than one-tenth of its U.K. branches as it aims to shore up profits amid tough competition.
The cuts will save 25 million pounds ($32 million) to 30 million pounds a year, the owner of the Plumb Center chain said in a statement Tuesday. The company, which gets more than 80 percent of its earnings from the U.S., also said it was reviewing its strategy in the Nordic region.
The company disclosed the U.K. cuts as it posted a 7 percent increase in trading profit to 917 million pounds for the 12 months ended July 31. Revenue increased 8.5 percent to 14.4 billion pounds, slightly above analyst estimates.
“We will remain vigilant in controlling our costs to protect profitability while investing in attractive opportunities for profitable growth,” Chief Executive Officer John Martin said in a statement. “We are confident that Wolseley will make further progress in the year ahead.”
Wolseley was down 3.8 percent at 4,141 pence at 8:45 a.m. in London.
The company plans to cut as many as 80 of 750 U.K. outlets and eliminate jobs in order to simplify its network and “greatly improve service levels, drive availability and choice for customers and generate better returns for shareholders,” Wolseley said in the statement. In the U.S., where Wolseley owns plumbing supplier Ferguson, it said it saw strong demand from residential and commercial markets but experienced weakness in the industrial sector.
Tough competition and sluggish demand are also putting pressure on other U.K. building suppliers such as Travis Perkins Plc, Grafton Group Plc and Jewson Ltd. Commodity prices have risen for some after the plunge in the pound that followed the U.K.’s vote to leave the European Union.
“They’re all trying to work out what kind of formats they want to operate in a market that’s not delivered very much volume,” said Clyde Lewis, an analyst at Peel Hunt, by phone. “It’s a tough part of the market.”