The bigger they are…

The worth of a State, in the long run, is the worth of the individuals composing it

…the louder the noise they make as they stumble.

As headline figures go, it’s pretty grim. Travis Perkins, the behemoth that for years has bestrode the UK merchanting sector like a, well, a bestriding behemoth, has posted some  quite painful results for the full year. Group revenue that’s north of £4bn is all fine and dandy, but a) it’s only a smidgin above what it reached in 2023, b) operating profits are on the floor and c) pre-tax profits are through the floor and nestling somewhere in the vicinity of the drainage cover in the driveway.

For years, TP was the business to emulate. Its gross profits were to be envied, even as the rest of the world wondered how it managed to keep them steady. Over the years, Travis Perkins kept its gross margins because it focussed on what it was good at, sometimes, as in 2009, at the expense of turnover.

We could spend hours discussing the reasons for its current woes, not all of them of its own making; it is bloody hard out there, and when you are the biggest by such a long way, your head is always going to be above the parapet. As such, you will be in the spotlight, and, like a celebrity caught doing the school-run in their pyjamas, your foibles will be big news. It doesn’t really matter that the rest of the industry is also struggling to a greater or lesser extent with many of the same challenges, you’re the biggest so your woes will be writ larger.

The analogy of Travis Perkins, in common with other large national chains, being akin to an oil tanker – big and powerful, but slow to turn around and switch directions – has probably been done to death, not least by me. I’m now seeing it as more like a shrub in the garden. One that has been growing bigger and bigger for years, that has benefitted from some judicial pruning from time to time. However, in the last few years, it’s got out of hand, and been allowed to grow too ‘leggy’ (gardening term).

To really squeeze some more from this analogy, the weather in the garden has been so foul that the head gardener found other things to focus on. Now the garden management has changed, it’s clear that the shrub has some really healthy parts, it just needs to be trimmed a bit. I won’t use the term dead wood, that’s just rude, but a decent tidy-up is on the cards.

To be fair, that’s exactly what’s been happening behind the scenes. I have my sources, and I know that things are not as bad as the news stories (including the one I posted today) would indicate. There has been a change in culture, and it does, I’m told by an insider, feel like a much better place to work, that the plans are good, they are underway, and there is a quiet confidence that recovery will come.

The changes to National Insurance, to minimum wages, and all the current economic challenges will bite TP as well as the rest of the sector. The market is still what it is, but it’s far easier to navigate things if you are just fighting the same enemies as your competitors, rather than your own internal ones as well.