The largest supplier of plumbing and heating products in the world, Wolseley, is to spend £100m on slashing 800 jobs and closing 80 branches in the UK.
The company outlined the cutbacks as part of a review of its operations in Britain, which has been hit by tepid demand and tough competition in the property repair, maintenance and improvement market.
Wolseley, which owns brands such as Plumb Center, said that the overhaul of its business in the UK was intended to generate yearly cost savings of up £25-£30 million over two to three years once complete. The division accounts for just 8% of the FTSE 100 group’s trading profit, with most of this coming from its US arm.
Chief Executive, John Martin, said the objectives were to improve levels of customer service, increase availability of materials and generate better returns for shareholders. It will also involve the closure of a distribution centre.
He said: “Regrettably this will result in job losses which we will handle sensitively and minimise through redeployment and attrition as far as possible.”
The announcement came as Wolseley revealed a windfall from the weaker pound. Trading profits increased by 7% to a record £917 million in the year up to July 31, mostly because of the lower exchange rate, while revenue increased by 8.5% to £14.4 billion, half of which was because of currency effects. Fewer one-off costs saw a 43% rise in pre-tax profit to £727 million.
However, Mr Martin offered a sober outlook: “Demand across our markets remains mixed, with some uncertainty in the economic outlook.”
Shares in Wolseley fell by 1.3 per cent on Tuesday to £42.44.
Analysts at Liberum called the results “a little disappointing” and flagged that management had warned of a slow start in the current financial year.
They added: “However, the announced UK restructuring is welcome, and should generate good returns once complete.”