Wolseley To Close Additional Locations
Between July 31, 2008 and Jan. 31, 2009, Wolseley reported a net decrease of 133 in branches in North America. In response to slowing markets in the first half, Ferguson reduced employee headcount by 2,067, about 10% of its total workforce. The company said it will continue to evaluate additional locations for closure in line with market conditions.
"Current indications are that the United States will be the first to recover from the economic downturn and Ferguson should be well positioned to benefit from this," Wolseley said. "As the current downturn continues, the directors believe that a number of [Ferguson's] competitors will exit the industry, which should create the opportunity to increase its market share organically." Wolseley noted that the directors intend to grow the business with select bolt-on acquisitions when appropriate and with "new formats and routes to market" such as e-commerce and an expanded variety of products.
The company also noted the benefits of integrating Wolseley Canada into the Ferguson business. "Although Ferguson continued to perform strongly compared to the overall market in the first half of its current fiscal year, local currency revenue in the U.S. Plumbing and Heating Division declined by 11.3%, ...with organic revenue down 11.6%," Wolseley said. The company reported that underlying trading profit, excluding property profits, was down by 21.4%.
"Despite the challenging conditions, gross margin was marginally up, reflecting internal process improvement, changes of business mix toward higher margin business generated from showrooms, counter sales and private label products," the company said.