Wickes profits plummet as customers cut back on costly installations

Wickes’ profits fell by almost a quarter in the first half as challenging market conditions prompted some clients to postpone major spending.

The home improvement retailer, which operates around 229 sites across the UK, revealed its adjusted pre-tax profits fell 24.8 per cent to £23.4m in the six months ended June 29.

Although it made record gains in market share in its retail division, the group’s legal turnover still fell 3.4 per cent to £799.9m due to a 17 per cent drop in revenue from its design and installation ranges.

Wickes said the result reflected a Covid-induced slowdown in order books and a “softer market environment” for high-value installations.

However, the Watford-based firm saw an 18.8 per cent rise in sales of its lower-priced lifestyle kitchens.

Its TradePro business also recorded a 14 per cent increase in revenue, as the number of active members rose from 82,000 to 541,000.

Since then, Wickes has grown TradePro membership to 1 million for the first time and seen trading conditions improve, supported by improved like-for-like sales growth and a “stabilising” design and installation division.

As a result, the company still expects to make £40.4m in adjusted pre-tax profits this financial year.

David Wood, Wickes chief executive, said: ‘We are on track for the remainder of the year and are encouraged by trading at the start of the second half.

‘Looking ahead, our excellent customer offering, proven growth levers and focus on cost control position us well within a home improvement market that continues to offer significant opportunities.’

Like many DIY retailers, Wickes enjoyed booming trade throughout much of the Covid-19 pandemic as lockdown restrictions forced Britons to spend more time indoors.

Demand was further boosted by cheaper mortgages, a temporary reduction in stamp duty, the accumulation of excess savings and a growing desire by Britons to reside in larger properties.

Trading has stagnated since the lockdown ended and mortgage costs have risen due to successive interest rate hikes by the Bank of England.

Julie Palmer, partner at Begbies Traynor, said: ‘With promises of more pain from the government in the autumn budget, consumer confidence may begin to fall once again, which does not bode well for Wickes.

However, he noted that the company’s healthy cash balance sheet and stagnant operating costs “mean it is well positioned to overcome current issues and deliver when the situation improves for consumers.”

Wickes Group Shares rose 1.2 per cent to 167.2 pence on Tuesday morning, though they are still down around a third since the company was spun off from Travis Perkins in April 2021.