Travis Perkins to raise cash as trading remains tough

Builders’ merchant chain Travis Perkins has announced a rights issue to raise £300 million, as like-for-like sales dropped 14.4% in the four months to April 30th. In a statement, the company said: “Overall the group has performed ahead of the board's expectations in the first four months of 2009 in markets that have, as anticipated, continued the slowdown seen throughout 2008”.However, the company also said that additional funding was needed to pay off some of its £1 billion of debt and that it had called an extraordinary general meeting for later this week to get shareholder approval for the fully underwritten rights issue.Retail revenue for the 18-week period ended May 2nd declined by 1.9% with like-for-like sales declining by 3.6% on a delivered basis compared to the same period in 2008. Like-for-like sales for retail (on an ordered basis) over the same period declined by 1.6%.Meanwhile, its retail chain Wickes made “significant gains” in kitchen and bathroom revenue with like-for-like sales on a delivered basis up by 12.5% and on an ordered basis up by 22.8% on the same period of 2008. Wickes also initiated a change in promotional strategy, using television advertising instead of predominantly relying on the paper-based catalogues and advertising materials it used previously.The company said that this strategy enabled it to increase its revenue from sales of kitchen products in the early part of 2009, capitalising on the lack of competitors in the market.In conclusion to its trading statement, the company said: “The board expects the markets in which the group operates to continue to weaken until at least the third quarter of 2009. The board believes recent lead indicators relating to the housing market, such as mortgage approvals; housing transactions and house prices; consumer and customer confidence; and construction orders generally show signs of stabilisation. However the impact of any potential increases in unemployment on these markets and indicators is uncertain”.