The investment column: Buoyant housing boosts Wickes
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Not long ago Wickes was lurching from one financial crisis to another. Now, after a rescue rights issue, the DIY retailer looks to have returned to the financial straight and narrow. It has off-loaded the loss making continental European businesses and the UK DIY market is being buoyed by the housing market recovery.
Wickes' like-for-like sales rose 12 per cent in the first six months of the year. This sales growth, tight cost control and lower stock holdings helped the group to return to the black at the operating level, with a first-half profit of pounds 5.9m.
Wickes' new management team plan to kick-start its store-opening programme again in 1998. It is also embarking on a multi-million pound refurbishment programme to lift sales of higher-margin products. With margins of around 2 per cent against the industry average of 5-6 per cent, there is scope for improvement.
Wickes' shares rose 16.5p to 196p yesterday on the encouraging results. Analysts forecast current year profits of around pounds 6m, ignoring the loss it made selling the European businesses. Profits should rise to pounds 20m next year as the recovery continues and the group also has pounds 30m of tax losses up its sleeve.
On these numbers the shares look cheap. But Wickes remains at the mercy of the fickle DIY market. It admits that the housing market is already showing signs of slowing down. And the group hasn't got the fire-power to slug it out with the likes of B&Q and Homebase if demand begins to fall and prices are slashed. Given the potential problems ahead, Wickes' share price looks about right.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments