Wickes sales rise but DIY retailer warns of extra £7.5m in energy costs in 2023

Home improvements retailer Wickes has warned that its energy costs will be more than £7million higher next year.

Wickes’ total like-for-like sales rose 2.6 per cent in the three months to the end of September, up from 0.8 per cent growth in the first-half.

Sales at its core DIY division were flat as the boom in home revamps seen during the pandemic continues to fade, but this was offset by a 12.2 per cent rise at its ‘do it for me’ (DIFM) arm.

Wickes, which offers end-to-end services from design to installation for things like kitchens and bathrooms, said it worked through its ‘elevated order book’.

However, DIFM orders in the third quarter were down versus last year as customers were ‘taking longer to commit to big ticket projects’. 

The group kept its profit guidance for the year unchanged at between £72-£82million, but said uncertainty remains due to high inflation and low consumer confidence.

The company warned specifically over ballooning energy costs, which it expects to be £7.5million higher in 2023 when its contract ends next March – if the costs remain at the current price cap for businesses.

Victoria Scholar, head of investments at interactive investor, said: ‘The post-pandemic DIY boom is fading, and inflation is rising, putting downward pressure on demand and upward pressure on costs, squeezing the retail business during the cost-of-living crisis and ahead of a possible recession.

‘Despite this, Wickes has been managing inflation by increasing prices, which has helped to boost revenues in the third quarter.’

Wickes said the rate of retail price inflation has in part ‘moderated’ since the first half thanks to a fall in the cost of timber. 

On another positive note, it said its local trade sales have performed strongly, with its TradePro discount scheme for tradespeople attracting 10,000 new subscribers per month to a total of around 720,000.

DIY retailers, which were some of the biggest pandemic winners, have been warning of slower demand as customers tighten their belts. 

This week, building materials merchant Travis Perkins reported rising sales but observed ‘some slowing of demand’ among smaller trade customers. 

Kingfisher, the group behind B&Q and Screwfix, reported a 28 per cent fall in first-half profit last month as demand for DIY continues to fade and the cost of living crisis hits spending.

Wickes shares were 4 per cent lower at 119p in afternoon trading on Friday. They are down almost 50 per cent since the start of the year.