Travis Perkins returns to growth as merchanting efforts start to pay off

Travis Perkins reported a return to growth in Q3 2025, with group like-for-like revenue increasing 1.8%, reversing a 2.1% decline in the first half. This recovery was primarily driven by its Merchanting division, which saw LFL sales up 1.7% after previous declines, indicating success in competitive positioning efforts. While Toolstation's LFL revenue grew 2.3%, the overall year-to-date group revenue remains down 1.3%, with management emphasizing continued investment in pricing and promotions amid a competitive market, alongside improved cash generation ahead of the new CEO's arrival.

Analysis

Travis Perkins (LSE:TPK) reported a significant turnaround in Q3 2025, achieving 1.8% like-for-like (LFL) revenue growth, which reverses the 2.1% decline experienced in the first half of the year. This positive shift was primarily driven by the Merchanting division, which saw LFL sales increase by 1.7%, a notable improvement from declines of 1.0% in Q2 and 3.2% in Q1. The overall group revenue, however, remains down 1.3% year-to-date, reflecting the earlier weakness.

The recovery in Merchanting is attributed to management's efforts to "sharpen the competitive position," including investments in pricing and targeted promotions, which are expected to continue in the near-term. While Toolstation delivered solid 2.3% LFL revenue growth, this was slower than its 2.9% performance in the first half, suggesting a slight moderation in its growth trajectory. The Chair, Geoff Drabble, highlighted a focus on "building top-line momentum and regaining market share" in the competitive market.

The company also noted ongoing improvements in cash generation, coupled with capital discipline and cost control, which are facilitating further reinvestment into the business. This financial strengthening comes ahead of incoming CEO Gavin Slark's arrival in January, signaling a stable operational foundation for the new leadership. The overall sentiment surrounding these results is moderately positive, with an optimistic tone regarding TPK's specific performance.

Key Decisions for Investors

• Investors should closely monitor the sustainability of the Merchanting division's market share gains and the impact of continued pricing investments on overall margins.
• It may be prudent to assess the strategic direction and any potential shifts under the incoming CEO, Gavin Slark, following his arrival in January.
• Given the year-to-date revenue decline, further sequential improvements in Q4 will be crucial to confirm a sustained recovery trend and validate the current optimistic outlook.