Wolseley to close 200 UK branches and cut 2,000 jobs

Wolseley, the builders’ merchant group, is to close 200 of its branches, resulting in 2,000 job losses in the UK.

The drastic action follows a 65% dive in trading profit as a result of “a rapid deterioration in UK market activity.”

Wolseley’s summary of the past three months’ trading, to 31 October, provides details of activity in various global divisions.

Performances in the UK were:

Heavyside brands

• Build Center - continue to be affected by the rapid deterioration in new residential construction. 

Lightside plumbing and heating brands

• Bathstore - significant deterioration in revenue in the first quarter.
• Plumb Center - continues to show resilience with more than two thirds of revenues relating to the residential RMI market and, in particular, the heating segment which remains relatively robust. 

Commercial and Industrial

• Business continues to hold up well. The gross margin is slightly up on the first quarter of the prior year, although there are increasing signs of competitive pricing pressure.

During the first quarter of 2008 Wolseley cut staff numbers by 170 at a cost of £6m in a move expected to trigger annual cost savings of £8m.

Wolseley UK has pushed much further with today’s announcement of an additional programme of cost reduction aimed at slicing another £80m off the group’s annual costs.

Chip Hornsby, chief executive, said: “In anticipation of further market decline, the restructuring will be phased over the next few months and when completed is expected to result in headcount reductions of around 2,000, subject to employee consultation, over 200 branch closures and consolidations and exceptional costs of £45m.”

Today’s interim management statement, issued on the Stock Exchange this morning, offered an overview on global performance:

• 2% fall in turnover – the figure would have been 8% but for the benefits of an improved exchange rate
• 45% drop in profit
• 8% rise in net debt to £2.7bn.