Wickes shrugs off supply chain problems as sales rise by a third – and it raises profit expectations thanks to home improvement growth
- Home improvement group expects full year profit of £67m to £75m
- Wickes announced an interim dividend of 2.1 pence after a strong first half
- Firm greets ‘strong’ supplier relationships to navigate supply chain issues
The home improvement boom in lockdown has boosted sales at Wickes by a third despite supply chain tightness, it revealed today.
The DIY and home improvement store reported a 33.1 percent increase in sales in the first half of 2021, exceeding market expectations and leading to an increase in profit forecasts for the year.
Wickes Group, which spun off from Travis Perkins earlier this year and got its own stock market listing, revealed its profits were above guideline at £46.5 million and announced its first-ever dividend, an interim payment of 2.1 pence. .
The high-flying chain told shareholders on Thursday it can look forward to full-year profits “to the top of market expectations” of £67m to £75m.
The DIY sector has boomed since the start of the Covid-19 pandemic in stay-at-home Britain
The UK’s DIY sector has boomed since the start of the Covid-19 pandemic as stay-at-home Brits have embarked on home improvement projects.
Wickes said it continues to see strong year-over-year growth, helped by strong demand from local commerce, even as two-thirds of sales in the first half were driven by digital channels.
A number of UK companies, such as Co-op on Thursday, have reported financial results below expectations, with bosses blaming the country’s ongoing supply chain problems.
However, Wickes told shareholders it successfully dealt with pandemic-related constraints and supply chain challenges.
CEO David Wood said: ‘Our strong supplier relationships mean we have coped well with inflationary pressures and resource constraints’
However, the company did see an impact on gross margin due to higher material cost inflation and higher promotion spending.
At 238p, Peel Hunt analysts said: Wickes shares ‘keep looking too cheap to us’ and set a target price of 320p. The stock rose 2.7 percent in early trading.
Wickes shares initially rose after listing, but have since fallen below the price they hit the stock market at.
Wood added: “While the immediate external environment remains volatile, we look to the future with confidence.
“We expect to deliver a full-year adjusted profit before tax that is at the higher end of expectations, and we have the right business model to acquire more customers and take advantage of the growth opportunities within a large and growing market for home improvement.’
Wickes shares remain below their pre-Covid highs