Interim Results 2021
Wickes Group plc - Interim Results 2021
for the 26 weeks period to 26 June 2021
Strong first half performance driven by digitally-led, service-enabled proposition
Financial Highlights
- Revenue growth up 33.1% on a like-for-like basis*, and 22.4% on 2019, driven by strong Core performance
- Adjusted profit before tax increased to £46.5m**, ahead of guidance of around £45.0m
- Reported profit before tax increased to £35.7m, reflecting demerger and IT separation costs
- IFRS net debt reduced by £100.2m to £564.8m compared to the Prospectus pro-forma opening position driven by strong trading performance and cash generation
- Capital investment and IT separation costs are weighted to the second half of the year and working capital benefit will partially unwind
- First Wickes Group plc interim dividend declared of 2.1p
- We now expect to deliver full year adjusted profit before tax towards the upper end of market expectations
Operational Highlights
- Digital strength and capability continues to underpin performance with strong retention and growth of active digital customers; two thirds of sales driven by digital channels
- Further market share gains in Core across both DIY and local trade across a broad range of categories, driven by the strength of the digital proposition and supported by new ranges
- Resilient performance in DIFM (Do-it-for-me) with showrooms closed through to 12 April and 1m interactions with our newly developed virtual showroom journey within six weeks of launch
- Further growth in the Wickes installer base, with wider market issues driving an extension of lead times from order to completion
- Successfully navigating Covid restrictions and supply chain challenges
Summary financial results
| £m | 26 weeks to 26 Jun 21 | 26 weeks to 27 Jun 20 | Change |
|---|---|---|---|
| Revenue Core DIFM | 812.0 666.7 145.3 | 612.7 491.8 120.9 | 32.5% 35.6% 20.2% |
| Gross profit Gross profit % | 294.8 36.3% | 225.9 36.9% | 30.5% |
| Adjusted** operating profit Adj operating profit % | 61.9 7.6% | 30.9 5.0% | 100.3% |
| Adjusted** profit before tax | 46.5 | 14.5 | 220.7% |
| Adjusted** basic earnings per share | 14.6p | 4.7p | |
| Reported operating profit Operating profit % | 51.1 6.3% | 10.9 1.8% | 368.8% |
| Reported profit / (loss) before tax | 35.7 | (5.5) | |
| Basic earnings / (loss) per share | 13.5p | (0.8)p | |
| Interim Dividend | 2.1p | n/a |
*Like-for-like sales analysis is explained, reconciled and calculated in note 3 of the interim financial statements
**Adjusted measures represent results on an IFRS basis and exclude adjusting items which comprise significant restructurings, significant write downs or impairments of current and non-current assets, the costs of demerging and listing the business, the associated costs of separating the business from the Travis Perkins Group’s IT systems, and the effect of changes in corporation tax rates on deferred tax balances (see note 2 of the interim financial statements for a detailed explanation of these items). These measures have been explained, reconciled and calculated in note 15 of the interim financial statements.
Current Trading & Outlook
As expected, Core performance has moderated as we annualise tough 2020 comparatives, however we continue to see strong year on two year growth driven by notably buoyant demand from local trade and underpinned by our digital capability.
Following the re-opening of our DIFM showrooms on the 12 April, ordered sales grew strongly through May and June. Over the summer, DIFM orders have since settled back to be broadly in line with 2019.
The well-documented demand for installers, and in particular the builders that many wider projects are dependent upon, combined with ongoing product supply restrictions, means lead times to project completion have extended. This will result in a higher carry over order book into next year which will benefit financial year 2022.
Given the strong outlook for Core and DIFM trends, together with half year results which delivered adjusted Profit Before Tax £1.5m ahead of guidance, we now expect adjusted Profit Before Tax for the full year to come in towards the upper end of analyst expectations (range £67-£75m). This assumes no further significant change as a result of Covid disruption or restrictions.
David Wood, Chief Executive, commented:
"This is a strong first half performance underpinned by our attractive digitally-led, service-enabled proposition. In our first set of results since demerger, we have delivered an increase in sales and profits as we continue to help the nation feel house proud.
David Wood Chief Executive
As a business we have responded well to the increase in demand across our three routes to market, supporting all our customers. I would like to thank each of my colleagues for their continued hard work and support.
In Core we have gained further market share driven by the strength of our proposition and DIFM has been remarkably resilient despite showrooms being closed through to April.
Throughout this period, our strong relationships with suppliers means that we have navigated inflationary pressures and raw material constraints well – and this remains the case. We continue to provide customers with the products and services they need at the best possible value.
Turning to the wider home improvement market, external factors continue to indicate strong growth opportunities. An ageing housing stock, continued property transactions and growing consumer confidence are all driving customers to improve their homes. In addition, the increased time spent at home has fuelled the desire to renovate and refurbish – not only from homeowners – but also amongst rental tenants and the millennial generation.
While the immediate external environment remains volatile, we look to the future with confidence. We expect to deliver a full year adjusted Profit Before Tax towards the upper end of expectations, and beyond that, we have the right business model to win over more customers and capitalise on the growth opportunities within a large and growing home improvement market."
Investor & Analyst meeting
A webcast for investors and analysts will be available today at 9.00am (UK time), followed by a live Q & A with the Wickes management team. The webcast be accessed at: https://webcasting.brrmedia.co.uk/broadcast/612f98e812f0cb436ea68dc1
A recording of the webcast will be available on the Wickes Group plc website later today: https://wickesplc.co.uk
Contacts
Wickes
Investor Relations
Andy Hughes
+44 (0) 776 736 5360
investorrelations@wickes.co.uk
Headland
PR Adviser to Wickes
Lucy Legh, Will Smith, Charlie Twigg
+44 (0) 0203 805 4822
wickes@headlandconsultancy.com
About Wickes
Wickes is a digitally-led, service-enabled home improvement retailer, delivering choice, convenience, value and best-in-class service to customers across the United Kingdom making it well placed to outperform its growing markets. In response to gradual structural shifts in its markets over recent years, Wickes has a balanced business focusing on three key customer journeys - Local Trade, DIY (together "Core") and Do-it-for-me ("DIFM").
Wickes operates from its network of 232 right-sized stores, which support nationwide fulfilment from convenient locations throughout the United Kingdom, and through its digital channels including its website and TradePro mobile app for trade members. These digital channels allow customers to research and order an extended range of Wickes products and services, arrange virtual and in-person design consultations, and organise convenient home delivery or click-and-collect.
Forward looking statements
This announcement may include statements that are, or may be deemed to be, forward-looking statements. By their nature forward-looking statements involve opportunity, risk and uncertainty since they relate to future events and circumstances, and actual results may differ materially. Any forward-looking statements in this announcement reflect management’s view with respect to future events as at the date of this announcement.