Bathstore chain’s sales performance proves a drag on Wolseley

Wolseley, which is the world’s largest specialist distributor of plumbing and heating products, also took a £29m write-down to reflect Bathstore’s reduced value on its books.

The company said the chain, which it has tried to sell in the last year, faced “particularly challenging” trading conditions but remained profitable.

Bathstore is the company’s only consumer-facing brand in the UK, trading alongside building supply operations such as Plumb Center.

Across the UK business, like-for-like sales were up 2 per cent in the year to July 31 and trading profits increased by £18m to £109m.

However, one-off items including the Bathstore write-down meant operating profits were £13m.

Wolseley also highlighted a weaker sales trend in recent months, with the final quarter showing a like-for-like decline of 2 per cent on a year earlier.

Public sector activity, which represents around 25 per cent of UK revenue, stalled in the second half but the more resilient repair and maintenance sector, which represents about 65 per cent of revenues, held up “reasonably well”.

Group pre-tax profits were £391m in the year to July 31, compared to a loss of £328m the previous year, while revenues increased 3 per cent to £13.6bn.

It represents its first annual profit since 2008 and prompted the company to announce a return of its full-year dividend.

Chief executive Ian Meakins said the business was in good shape and that trends in August and September were similar to the end of the financial year.

However, he added: “Recent economic forecasts have weakened and over time this is likely to have an impact on our markets.”

The company has reduced its debt to £705m from borrowings of nearly £3bn seen in the aftermath of the 2008 credit crunch.

The turnaround process has seen tens of thousands of job cuts, an emergency cash call and a swathe of businesses either closed or sold, including most recently Build Center in the UK. The group has also switched its tax base to Switzerland.

Shares in Wolseley fell 3 per cent despite profits coming in at the higher end of City expectations.

Keith Bowman, an analyst at Hargreaves Lansdown stockbrokers, said: “Having completed a group restructuring following the 2008 economic downturn, management again find themselves facing gathering economic storm clouds.”

Flor O’Donoghue, an analyst at Davy Research, added: “The full year numbers are a little better than forecast in a year of significant progress.”

Wolseley UK has a regional distribution centre in Ripon, North Yorkshire.