Wolseley To Close 75 Ferguson Locations
May 23, 2008
The group issues results for first nine months of fiscal year. Wolseley plc will cut 250 jobs in the
United States and Canada, and close 90 branches, as the construction downturn
continues to hammer its results.
It is set to close 75 of
its Ferguson locations, laying off 200 workers, and shutter or consolidate
another 15 branches in Canada, laying off 50 workers.
will save the company roughly $138 million a year, meaning a $98.2 million
charge during the fourth quarter. Wolseley said further closures and layoffs
are in the cards and will be announced before July 31.
Wolseley reported its third-quarter results on
Tuesday. And though it said the first nine months of the fiscal year (ended
April 30) are in-line with the expected market conditions, the U.S. housing and
repairs, maintenance and improvement markets have continued to soften.
and industrial markets have held up well, and Ferguson reported a continuous
gain in marketshare, but the group will focus on cost reduction and cash-flow
Group revenue was up 2 percent, trading profit was 23
percent lower, and profit before tax and amortization and impairment of
acquired intangibles was down 30 percent.
At Ferguson, it posted an achieved revenue growth of 1
percent, due to acquisitions. Organic revenue declined 3 percent and trading
profit was 1 percent lower than the equivalent period in the prior year.
Stock Building Supply continued to be affected by the
U.S. housing slow-down and saw revenue fall 25 percent with additional pressure
on gross margins. The trading loss for the nine-month period was $158 million USD.
Wolseley Canada achieved 2 percent constant currency
revenue growth. Revenue in Wolseley UK, which includes Ireland, increased 3
percent. However, Wolseley UK experienced a more challenging April as the
market slowed significantly.
Further cost-reduction and business-improvement actions
will be taken in North America and Europe before July 31, the end of Wolseley’s
fiscal year. Outlook-challenging conditions in many markets are expected
to continue, although the U.S. commercial and industrial market, which accounts
for the majority of Ferguson's business, is likely to remain stable into the
next financial year. The group's rigorous focus on cost reduction and cash
maximization will continue.
group chief executive of Wolseley, said, "Given the continuing tough
market conditions, our response has been to take further action to lower the
cost base and improve cash flow, while continuing to pursue our longer-term
strategic aims. The cost-reduction actions outlined today will enable us to
restructure the business further, so that we are better positioned for the