Wickes profits soar on back of DIY boom
WICKES shares surged after the home improvement retailer upped its profit forecasts for the third time.
The Northampton-based group expects to make as much as £83m this financial year – substantially higher than previous predictions of between £67m to £75m – after a strong start to the final quarter.
Wickes was spun off from Travis Perkins in April this year and so far the move has been a success.
Travis Perkins had been looking to offload Wickes since 2018 when it believed that a younger British generation had fallen out of love with DIY and it wanted to focus on its trade customers. But Travis Perkins’ loss has been Wickes investor’s gain as DIY has soared in popularity during the pandemic, with people using their extra time at home to carry out renovations.
The group splits its sales into three categories – local trade, DIY and do-it-for-me, which includes home improvements that do not require a professional designer or installer. The latter was the star of the show in the trading update.
Russ Mould, investment director at AJ Bell, said: ‘You have to doff your cap to home improvement retailer Wickes.
‘To achieve a better-thanexpected margin performance during a period of sharply rising input costs is no mean feat. It is testament to Wickes’ strong supplier relationships and the efficiency of its background processes and digital capability that it has been able to do this without making the customer pay through the nose.’
Wickes shares rocketed 11.3pc, or 24.2p, to 239.2p, and gave a positive read-across to B&Q-owner Kingfisher, whose stock climbed 2.5pc, or 8.1p, to 331p. Travis Perkins, meanwhile, edged up 1.7pc, or 25p, to 1517p.
The wider market started the day on the front foot but ended on a sour note, with the FTSE 100 falling 0.1pc, or 6.89 points, to 7122.32, while the FTSE 250 dropped 0.2pc, or 38.76 points, to 22646.08.
It was a dramatic week as fears about the Omicron variant swept through markets, with the Dax and Footsie both hitting a threemonth low – but any late rally was scuppered by disappointing US employment numbers. Official figures showed 210,000 jobs were added in November – falling far short of estimates of 550,000.
Wall Street indices were in the red, with the Nasdaq dropping 2.5pc and the Dow by 0.4pc.
Commodity markets were faring better as oil prices surged by up to 3pc, sending shares in BP up 1.3pc, or 4.25p, to 340.85p and Shell up by 1.1pc, or 17.4p, to 1646.6p.
Brent crude was worth around $71 a barrel last night, a recovery from a tumble to $67 earlier this week but still a far cry from the $82 it was worth before the alarm bell was sounded over Omicron.
The rise came after the Opec cartel agreed to be flexible in the amount of oil it produces in the coming months, saying it would be willing to cut back if demand weakens. It comes as investors wait for more information on Omicron and hopes are that the hysteria will pass.
David Beckham-backed cannabis skincare company Cellular Goods slid into the red after it reported losses of £3.3m in the 12 months to August as it ploughed money into its float and setting up production. Shares in the group, which went public in February, fell 4.6pc, or 0.38p, to 7.75p. It made no revenue as it only recently launched its first product.
Elsewhere, Audioboom rose 1pc, or 10p, to 1060p after property entrepreneur Nick Candy scooped up another £450,000 of stock in the podcast developer.
Premium mixer-maker East Imperial’s shares were turbocharged (rising 26.2pc, or 2.75p, to 13.25p) after activist investor Taylor Partners won a campaign to unseat chairman Rob Soni.
Retail industry veterans Alistair McGeorge and Colin Henry have been named chairman and nonexecutive director respectively.