15th Sep 2022 14:06
(Alliance News) - Wickes Group PLC reassured investors on Thursday as it stood by previous guidance despite worries over a less favourable outlook for the DIY market.
Shares in Wickes were up 9.6% at 126.70 pence in London on Thursday, but the stock is still down 47% since the start of 2022.
The Watford, England-based home improvement retailer reported a pretax profit of GBP33.5 million for the six months that ended July 2, down 6.2% from GBP35.7 million a year before.
The company said that the decline was mainly due to "slightly" higher adjusting items due to IT separation costs. Adjusting items increased 62% to GBP19.6 million from GBP12.1 million.
More positively, revenue grew 1.3% to GBP822.3 million from GBP812.0 million. The company attributed this to a strong recovery in delivered do-it-for-me service sales.
Wickes said it has seen a recent "softening" in the do-it-yourself market from the very high levels of demand experienced during the pandemic.
However, it still backed full-year guidance of an adjusted pretax profit in the range of GBP72 million to GBP82 million. In financial 2021, it generated an adjusted pretax profit of GBP85 million.
Liberum said the results highlight the resilience of Wickes's business.
"The maintenance of guidance should be seen as a huge sign of confidence, and this alone should drive the shares higher," said Liberum.
There have been worries that the DIY market, which boomed during the pandemic, could slow sharply as inflationary pressures hit consumers.
Data earlier on Thursday showed confidence among UK consumers has fallen into negative territory for the first time since June 2020.
The Consumer Confidence Index from YouGov and the Centre for Economics & Business Research fell by 4.2 points in August to 98.8 from 103.0, the largest decline since the early stages of the pandemic.
Lara Martinez, analyst at Third Bridge, said inflation is the "biggest challenge" facing the home improvement sector.
"Wickes's DIY segment is likely to struggle during an economic downturn as low-confidence consumers postpone big-ticket purchases. The Wickes trade division should be resilient and our experts say the business is poised to pivot in this direction," said Martinez.
By Lucy Heming; [email protected]
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