Wickes backs FY profit guidance as Q3 sales rise

Home improvement retailer Wickes backed its full-year profit guidance on Friday as it posted a jump in third-quarter sales, but warned over the impact of rising energy prices.

In the 13 weeks to 1 October, like-for-like sales grew 2.6%, compared with 0.8% growth for the first half. This was down from 5.4% in the second quarter of the year.

Wickes said core sales growth stabilised at the levels noted in its July trading statement. LFL sales were flat on a one-year basis, and 27.3% ahead on a three-year basis. The retailer, which was spun off from Travis Perkins, said sales have improved since the beginning of September, following the impact of extreme heat in July and August.

Local Trade sales performed "strongly", with the TradePro customer base growing by 10,000 per month to around 720,000. DIY sales remain below last year, although with no signs of further softening since the July update.

In the ‘Do it for Me’ (DIFM) business, LFL sales were ahead 12.2% on the year in Q3. Wickes said it is successfully working through the elevated order book. Orders in Q3 are down versus last year, but in line with the July update, with customers taking longer to commit to big ticket projects.

Wickes said that following the "stable" third quarter, it continues to expect full-year adjusted pre-tax profit of £72m to £82m.

The company also warned over the impact of rising energy prices once its energy contract ends in March next year. If energy costs were to remain at the current price cap, then its FY2023 energy costs would be around £7.5m higher than FY2022, it said.

Chief executive David Wood said: "This has been a period of further progress across all parts of the business, with customers and tradespeople continuing to come to Wickes on the strength of our value, availability and service.

"While we are watchful of external headwinds, we are continuing to focus on our growth levers and on maintaining rigorous control of our costs. Our uniquely balanced business model leaves us well placed to continue to outperform the market."

Victoria Scholar, head of investment at Interactive Investor, said: "Wickes has been caught up in the stock market volatility this year with shares slumping nearly 50% year-to-date. The post-pandemic DIY boom is fading, and inflation is rising, putting downward pressure on demand and upward pressure on costs, squeezing the retail business during the cost-of-living crisis and ahead of a possible recession.

"Despite this, Wickes has been managing inflation by increasing prices, which has helped to boost revenues in the third quarter. However, this may not necessarily translate into a strong bottom-line performance given the pressures from soaring energy bills that look set to continue to dampen profitability."