Signs of post-pandemic DIY slowdown as cost of living bites, Wickes warns
Shares fell as the business said that profit will be lower this year than last.
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Your support makes all the difference.There are fresh signs that people are hanging up their tool belts after months of home improvements during the pandemic, retailer Wickes said on Tuesday.
The business said that while sales of its DIY products are still ahead of their pre-pandemic levels, they have dropped from this time last year.
There have also been “signs of the market softening” in the last few weeks, the business told shareholders.
People are also holding off on big “do-it-for-me” projects as well.
The business said that on a like-for-like basis, DIFM sales had risen nearly 30% in the first half of the year.
It is encouraging to see continued outperformance in our core market share despite recent signs of softening in the DIY market
But “we have seen some slowing of new orders in recent weeks, as customers are taking longer to commit to big ticket projects, however conversion remains good, cancellations remain low and we continue to have a strong order book.”
In the last financial year the business made £85 million in adjusted profit before tax. This year that is expected to drop significantly, Wickes revealed to shareholders on Tuesday.
Adjusted pre-tax profit will likely fall somewhere between £72 million and £82 million, Wickes said.
It would still be a jump in profit from the £49.5 million that the business made two years ago, when it was still part of Travis Perkins.
There was one clear reason for this change, Wickes said. Customers are tightening their financial belts in part by hanging up their tool belts.
“Trading in recent weeks in DIY and a softer outlook for the DIFM market suggests customers are reacting to the uncertain macroeconomic backdrop as we enter the second half of our financial year,” it said.
Shares dropped by around 17% on Tuesday morning after markets opened in London.
Chief executive David Wood said: “Wickes has delivered another strong performance, as the business continues to provide the best value, choice and availability for customers.
“Our TradePro scheme is expanding with great momentum as tradespeople turn to Wickes for value during a period in which consumers are becoming more price conscious.
“It is encouraging to see continued outperformance in our core market share despite recent signs of softening in the DIY market.
“We continue to do a great job engaging DIFM customers as they take a little more time to consider their purchases.
“Our investment for growth progressed in the period with five store refits completed in the first half which continue to drive strong returns.
“We remain watchful of the macroeconomic backdrop and are managing the business appropriately to navigate these external pressures.
“We are confident that our uniquely balanced business model and great value offer for customers will enable us to continue to deliver for the benefit of all our stakeholders.”