Baumarkt wickes benefits from demand for energy efficiency products

Wickes benefited from sky-high energy prices in the face of booming demand for insulation products from home improvement retailers

  • Wickes reported an overall like-for-like sales increase of 11.5% in the final quarter of 2022
  • Orders for goods such as roof insulation and draft stoppers increased significantly
  • The company expects full-year adjusted pretax profit to be in line with forecasts

By Harry Wise Because that's money

Published: 15:56 GMT, 31. January 2023 | 16:51 GMT, 31. January 2023

Wickes sales growth improved towards the end of 2022 due to strong demand for energy-saving goods as shoppers sought to lower their household bills.

The home improvement retailer announced that total like-for-like sales rose 11.5 percent year-over-year in the final three months of 2022, following a 2.6 percent increase in the previous quarter and modest growth in the six months prior to that .

Trading during the previous winter season was dampened by delays caused by the advent of the Omicron variant of Covid-19, which resulted in longer lead times as some consumers and employees were forced to self-insulate.

Results: Wickes announced that total sales in the final three months of 2022 were up 11.5 percent year over year, after increasing just 2.6 percent in the previous quarter

The lack of coronavirus-related restrictions helped boost sales in the Watford-based company's Do It For Me customization services division by more than a third in the fourth quarter.

Core sales also rose 5.2 percent, helped by significant orders for energy-saving products such as attic insulation and draft stoppers.

The reopening of the UK economy and Russia's war in Ukraine were the main drivers of gas and electricity costs last year.

In addition, the UK housing stock is one of the warmest in Europe in terms of drafts, a problem exacerbated by falling installation rates of energy-saving measures after the UK government cut certain efficiency programs a decade ago.

David Wood, Chief Executive of Wickes, said, "With the increased cost of living and the colder winter months, more and more customers are turning to Wickes to help them reduce their energy consumption and bills.

"We offer market-leading products, from attic insulation to draft stoppers, and customers visit our online Sustainable Home Guide for great hints and tips on how to save energy and reduce costs."

Thanks to a solid year-end performance, the London-listed group expects annual adjusted pre-tax profit to meet analysts' consensus forecasts of between £72 million and £76 million.

However, it warned that energy costs would be around £10m higher in 2023 despite the recent fall in wholesale prices, while the decision to bring forward annual staff pay bonuses to January would add a further £3.5m to spend.

Since the start of the Covid 19 pandemic, home improvement businesses have seen an upsurge in trade as incarcerated Britons with extra savings sought to upgrade their properties or live in suburban and rural areas.

Sales have been further bolstered by the introduction of a temporary stamp duty exemption in the summer of 2020, low unemployment and low interest rates, which are boosting demand for mortgages.

The volume of home renovations has slowed as inflation has squeezed incomes, mortgage rates have skyrocketed, people are spending more time outdoors and companies have adopted a hybrid working model.

Wickes noted that its backlog at the end of December was down from a year ago but well above 2019 levels, while its annual core sales were up a third from pre-pandemic volumes.

Shares in Wickes Group fell 4.3 percent to 151.3 pence just before the close of trading on Tuesday, meaning their value has fallen by more than a fifth in the past 12 months.

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