DIY sales support Wickes as big-ticket items still off the table
Wickes has reported another drop in big-ticket home improvement sales as Brits continue to shy away from large purchases.
The company also announced a new share buyback programme of £20m, which will start in April 2025.
The retailer reported a one per cent drop in revenue in the year ended December 28, from £1.5bn last year to to £1.3bn.
Retail sales grew by 1.9 per cent, from £1.18bn to £1.21bn, but design and installation sales dropped 10 per cent to £326m.
Wickes’ operating profit dropped 8.7 per cent to £67m and earnings per share fell 34.7 per cent to 7.7p.
The company has been struggling with demand for larger-ticket items like installations since the cost-of-living crisis, with low consumer confidence causing Brits to shy away from large-scale home improvement.
However, there are green shoots: Wickes said ordered sales for the design and installation segment have been growing for the last two quarters.
Chief executive David Wood said the firm was “encouraged” by the growth.
“Given the strong progress over the last twelve months and the good start to the first quarter, we are well on track for the coming year,” Wood said.
Panmure Liberum rated the stock a ‘Buy’, with a target price of 200p. The stock cost 171p as of March 20.
“We continue to argue that Wickes’ profit base is increasingly supported by high-quality, recurring revenues from TradePro, where momentum remains strong and further upside potential exists,” analysts said.
Tradepro is Wickes’ loyalty program for trade professionals. Sales grew 14 per cent year on year, with growth in active members up to 581,000 from 478,000 last year.
“Additionally, the design and installation business appears to be turning around, suggesting consensus expectations may be too low,” analysts said.
ulie Palmer, partner at Begbies Traynor, said: “Wickes has delivered a mixed performance as it grapples with the ongoing squeeze on household budgets, but its value-focused offering has clearly helped to keep customers engaged.
“The 16 per cent fall in pre-tax profit isn’t pretty reading and it reflects the wider challenges facing many retailers in the current climate, where customers are increasingly cutting back on big-ticket items. That said, it’s no small achievement that Wickes has managed to maintain stable revenues and continued to grow its market share.
“The focus on offering practical, cost-effective solutions has clearly resonated with the value-conscious shopper. However, the pressure on discretionary spending is far from over and the cost-of-living crisis continues to weigh heavily on consumer confidence, meaning Wickes will have to remain agile if it’s going to successfully navigate the headwinds that lie ahead.”