Wickes gains as Brits go budget in kitchen refurbs
Wickes is benefiting from a slowdown in consumer spending as Brits switch to the value home improvement retailer and away from premium rivals, its boss has said.
The FTSE 250 group posted a 2.1 per cent jump in revenue to £865m in the six months to June, buoyed by rising sales of big ticket items like bathrooms and kitchens.
David Wood, the retailer’s chief executive, said Wickes is attracting more customers and transactions despite fragile consumer confidence and a slowdown in demand for new homes.
The home improvement boss told Morning Wire that Wickes’ customers are choosing “more affordable” cabinets while still opting for premium ovens, microwaves and work surfaces.
“There is some thoughtfulness and consideration from the customer, because the average order value is lower than previous years as customers do cut their cloth accordingly,” he said.
Wood said consumers are not stalling home refurbishments altogether: “For the last half a decade in the market, kitchen and bathroom volumes actually have been down, so those kitchens and bathrooms have been getting older, and at some point they will need to be replaced.
“And we’re winning more than our fair share in that market. We’re growing our volumes but certainly serving a more affordable project.”
More customers are switching to Wickes, and away from its up-market rivals, “because we offer a really high quality, affordable proposition,” Wood added.
Housing slowdown boosts Wickes
Wickes posted a £24.6m pre-tax profit in the six months to June, broadly flat year on year. The group hiked its dividend by 2.8 per cent to 3.7p per share.
Despite the slowdown facing the UK’s property market, Wood said the retailer is not reliant on home-movers for sales.
The retail boss pointed out that the group is “not exposed” to the new-build housing market, where housebuilders are cutting output targets, because these homes come with already-fitted kitchens and bathrooms.
Julie Palmer, managing director at real estate advisory BTG, said the slowdown in home-moving will help Wickes, as Brits opt to improve their existing homes rather than buying new ones.
“The slowing of the housing market across the year so far will also play into the demand for DIY and home improvements as people choose to stay put instead of moving while borrowing costs and stamp duty remain high, and uncertainty prevails,” she said.
Shares in Wickes jumped by 6.8 per cent in early trading to 188.6p.