Wolseley is to spend £100m ($129.54m) towards a turnaround and repositioning strategy aimed at its UK business. The heating and plumbing products supplier announced on Tuesday (27 September) that the move could lead to job redundancies of up to 800 employees and the closure of 80 branches.
The FTSE 100 group had initiated a review of its UK business following a decline in the market for repairs, maintenance and property improvement. While publishing the results of the review on Tuesday (27 September), Wolseley said it expects the overhaul to be completed within two to three years. The company has 750 branches and 6,000 employees in the UK, further said that this could help save costs of up to £25m to £30m annually, once the restructuring is complete.
Commenting on the same, John Martin, Wolseley's CEO said in a statement, "Our review of UK operational strategy has identified opportunities to transform our customer propositions whilst simplifying our branch network and supporting logistics facilities to greatly improve service levels, drive availability and choice for customers and generate better returns for shareholders. Regrettably this will result in job losses which we will handle sensitively and minimise through redeployment and attrition as far as possible."
This is not the first country where it has undertaken a restructuring process. It is said to have overhauled its businesses across other European regions in the past, amid weak demand. The company noted that it had now initiated a review of its businesses in the Nordic region.
Commenting on the strategy, analysts at investment bank Jefferies told Reuters, "[UK restructuring and the Nordics review could be the] first steps towards a U.S. only business." Wolseley owns Ferguson in the US, which is a wholesale distributor of plumbing supplies. It currently generates 80% of its profit in the US.
The announcement comes alongside Wolseley's 2016 annual results. The Leamington Spa-headquartered company said it had earned total revenues of £14.43bn for the year ended 31 July 2016. This was 8.5% higher than 2015. The year 2016 also saw the company post a record trading profit of £917m, which was up 7% from 2015.