Wickes' profits fall less than expected, but challenges remain

19th Mar 2024 07:32

(Sharecast News) - DIY and trade home-improvement retailer Wickes beat market forecasts despite a drop in its annual profits, but warned that trading since the start of the year continues to be challenging.

The company left its full-year dividend at 10.9p per share after a 7.3p final payment, in line with 2022, and said it expects to maintain its payout again for 2024.

Adjusted pre-tax profit, which excludes IT investment costs, totalled £52m in the year to 30 December, down 31% year-on-year due to softer demand and high cost inflation, but ahead of consensus estimates.

Adjusted revenues fell 0.3% to £1.56bn, as a 0.1% improvement in the core retail business to £1.19bn was offset by a 1.7% decline in design and installation activities to £371m which it said reflected a more challenging market environment for big ticket projects and the normalisation of its post-Covid order book.

The retailer blamed the cost-of-living crisis and continuing inflation for a softer market, with elevated interest rates also suppressing housing activity which has held back major home-improvement project spending. It said that UK consumers were continuing to show a preference for saving and undertaking smaller DIY projects over the next year, rather than undertaking large renovations like new kitchens or bathrooms.

Looking ahead, Wickes said its cost control and productivity plans for 2024 will not fully offset cost headwinds from the scale of increases in National Minimum Wage and business rates. However, core retail sales for the first quarter were in line with last year, and the board remains "comfortable" with current consensus forecasts which point to an adjusted pre-tax profit of £43.6m.

In a separate statement, Wickes announced the acquisition of 51% of Gas Fast, the parent company of solar installations business Solar Fast, which "enables us to accelerate our Design & Installation growth lever, capitalising on our expertise in installing major home improvement projects", according to chief executive David Wood. The stake was bought for £5.1m and will be funded by existing cash reserves.