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Wickes sales surge thanks to ‘do it for me’ demand, but DIY retailer warns of additional £7.5m in energy costs next year
- Energy costs will be £7.5m higher in 2023 after energy contract expires in March
- Like-for-like sales up 2.6% in three months to the end of September
- DIY sales flat as pandemic boom continues to abate, but DIFM sales rise 12.2%
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Home improvement retailer Wickes has warned its energy costs will be more than £7m higher next year.
Wickes’ total like-for-like sales rose 2.6 percent in the three months to the end of September, from a growth of 0.8 percent in the first half.
Sales in the core DIY division were flat as the boom in home renovations seen during the pandemic continues to decline, but this was offset by a 12.2 percent increase in ‘do it for me’ — branch (DIFM).
Warning: Wickes said customers ‘needed more time to commit to big ticket projects’
Wickes, which offers end-to-end services from design to installation for things like kitchens and bathrooms, said it has processed its “increased order book.”
However, DIFM orders in the third quarter were lower than last year as customers “took more time to commit to major ticket projects.”
The group kept its profit forecast for the year unchanged at between £72 and £82 million, but said uncertainty remains due to high inflation and low consumer confidence.
The company specifically warned of rising energy costs, which are expected to be £7.5m higher by 2023 when the contract expires in March – if costs remain within the current price cap for businesses.
Victoria Scholar, head of investment at interactive investor, said: “The post-pandemic DIY boom is dwindling and inflation is rising, pushing demand downward and costs rising, putting retail pressure on the retail sector. during the cost of living crisis. and in anticipation of a possible recession.
“Nevertheless, Wickes managed to keep inflation under control by raising prices, which contributed to higher sales in the third quarter.”
Wickes said retail price inflation has been ‘moderated’ in part since the first half thanks to a decline in timber costs.
Another positive is that local trade sales have performed strongly, with its TradePro merchant discount scheme attracting 10,000 new subscribers per month to a total of approximately 720,000.
DIY stores, which have been some of the biggest pandemic winners, warned of slower demand as customers tighten their belts.
This week, building materials merchant Travis Perkins reported rising sales but noted “some slowdown in demand” among smaller merchant customers.
Kingfisher, the group behind B&Q and Screwfix, reported a 28 percent decline in first-half profits last month as demand for DIY stores continues to decline and the cost of living squeezes spending.
Wickes shares were 4 percent lower at 119p in Friday afternoon trading. Since the beginning of the year, they have fallen by almost 50 percent.