Wickes’ profits plummet, but DIY retailer achieves record on-demand sales for energy-efficient products
- Declining core sales were offset by strong demand in the assembly services division
- Profits for the Watford-based group fell 46% due to IT separation costs
- Insulation and smart meters were more popular with Wickes customers
Wickes achieved record sales last year as skyrocketing energy bills drove up orders for energy-saving products.
The DIY retailer’s revenues rose 1.8 percent to £1.56 billion in 2022, while its core business posted further market share gains despite much stronger comparatives.
DIY and specialist retail sales improved significantly during the year as skyrocketing gas and electricity prices encouraged more Britons to pick up goods such as insulation, lighting, weatherstripping and smart meters.
Results: Wickes revealed revenue increased by 1.8 per cent to £1.56 billion in 2022
Like-for-like core earnings continued to decline marginally, primarily due to rising interest rates and cost-of-living pressures dampening the volume of real estate purchases and home renovations.
But this was offset by rising demand in the ‘Do It For Me’ (DIFM) assembly services arm, which had been hit hard last winter by the rise of the Omicron variant.
The easing of corona-related curbs has allowed installation teams to progress through the large DIFM order pipeline and complete some delayed projects.
Yet the Watford-based group’s profits plummeted 46 per cent to £31.9m following the cost of decoupling former parent company Travis Perkins’ IT infrastructure.
Wickes’ results follow those of B&Q owner Kingfisher, which also revealed a drop in profits due to weaker demand from homeowners to refurbish their properties.
Before last year, the UK DIY sector had enjoyed a roaring trade during much of the pandemic as lockdowns forced Britons to spend more time indoors.
Demand was also boosted by cheap mortgages, a temporary holiday with stamp duties, the build-up of excess savings by Britons and a growing desire to live in more spacious properties.
While sales have declined in a tougher economic context, Wickes said certain structural factors have kept the home improvement industry “a large and attractive market.”
The rise of hybrid working means people are still spending a lot of time at home, while rising energy prices have raised awareness of the need to upgrade the UK’s old and drafty housing stock.
Chief executive David Wood said: ‘Like all businesses, we remain vigilant about the external consumer environment.
“However, we have the right strategy and an attractive offer for customers and we look to the future with confidence.
“We will continue to invest in our distinctive growth levers and are well positioned to achieve further market share gains.”
For the first 11 weeks of this year, Wickes said core sales were “moderately behind” the corresponding period in 2022, but DIFM delivered orders higher thanks to its huge order book.
But Russ Mold, investment director at AJ Bell, warned that the current economic problems would make people more reluctant to spend money on refurbishing properties.
He said: “People’s budgets are less likely to extend to home renovation projects that are becoming less affordable…plus a slowdown in the housing market will reduce one of the key drivers for DIY and DIY for-me business.” .’
Shares Wickes Group were 1.4 percent lower at 143 pence late Thursday morning, about 46 percent below the April 2021 debut price of 263 pence following the split from Travis Perkins.