Interim Results 2023
Wickes Group plc - Interim Results 2023
for the 26 week period to 1 July 2023
Strategy continues to deliver, with positive first half LFL sales; full year expectations maintained
Financial Highlights
- Revenue growth of 0.7% to £827.7m (H1 2022 £822.3m) driven by the sales uplift in DIFM1
- Core LFL -0.8%2 with growth in the second quarter as weather patterns normalised;
- DIFM delivered LFL sales up 5.8%2 as we continue to work through the elevated order book and with ongoing growth in ordered sales
- £34.8m adjusted profit before tax and SaaS IT investment costs3 (H1 2022 re-presented £41.3m4), with cost inflation exceeding revenue growth
- Adjusted PBT £31.1m after £3.7m of SaaS IT investment costs3 expensed as required by IAS38
- Reported profit before tax of £21.1m primarily reflecting IT separation costs (H1 2022 £33.5m)
- Cash position of £190.0m (H1 2022 £166.5m), improved from the year end position of £99.5m reflecting the seasonal working capital cycle in the business
- Interim dividend declared of 3.6p (H1 2022 3.6p), reflecting our intention to maintain the same full year cash dividend as FY 2022
- £25m share buyback programme under way
Operational and Strategic Highlights
- Our strategy continues to deliver with growth levers all supporting further market share gains5
- Continued strong growth in our TradePro loyalty scheme, with 65,000 new customers signing up in the first half, and a period end base of 811,000
- Launch of Wickes Lifestyle Kitchens, with a free design service, to capture a larger share of the mass market
- Improved click & collect capacity and service levels drive meaningful channel shift back to stores, reducing distribution costs
- Six refits in the first half, with 11 in total planned for the full year; ROIC in line with plan at >25%
- Three store openings in the second half, including Chelmsford in July, as the opening programme accelerates and we look to open around 20 new stores over five years
- Good progress on productivity gains, offsetting cost inflation with the exception of energy costs, as previously outlined
- Updated capital allocation policy announced in July, with a strong balance sheet supporting investment in growth levers and enhanced shareholder returns
Current Trading & Outlook
Trading in July and August has been in line with our expectations, and we continue to expect full year adjusted profit before tax in line with market consensus (£45-48m after the impact of SaaS IT investment costs). Our next trading update for the third quarter is scheduled for the end of October.
David Wood, Chief Executive, commented:
"This was another positive period for the business, underpinned by the strength of our balanced business model and outstanding customer service delivered by our colleagues. We achieved a sales uplift and strong conversion rates in DIFM, while delivering another strong performance in Local Trade due to our market leading value on the lines that matter most.
David Wood Chief Executive
As we head into the Autumn, we are well-stocked with our extensive range of energy-saving products, as we look to support our customers in insulating their homes. While we remain mindful of the external environment, we are seeing customers turn to Wickes for our great value proposition. We are well on track for the remainder of the year and we have the right strategy in place to make further market share gains within the large home improvement sector."
Summary of half year financial results
£m | 26 weeks to 1 July 2023 | 26 weeks to 2 July 20226 | Change |
Revenue Core DIFM | 827.7 626.8 200.9 | 822.3 632.6 189.7 | +0.7% -0.9% +5.9% |
Gross profit Gross profit % | 297.3 35.9% | 292.6 35.6% | +1.6% +30bp |
Adjusted PBT7 | 31.1 | 41.3 | -24.7% |
Reported profit before tax | 21.1 | 33.5 | -37.0% |
Add back: adjusting items | (10.0) | (7.8) | +28.2% |
Add back: SaaS IT costs | (3.7) | 0.0 | na |
Adjusted profit before tax and SaaS IT costs7 | 34.8 | 41.3 | -15.7% |
£m | 26 weeks to 1 July 2023 | 26 weeks to 2 July 20221 | Change |
Adjusted basic earnings per share7 | 9.4p | 13.2p | -28.8% |
Basic earnings per share | 6.3p | 10.7p | -41.1% |
Interim Dividend | 3.6p | 3.6p | n/c |
Investor & Analyst meeting
A webcast for investors and analysts will be available today at 8.30am (UK time), followed by a live Q & A with the Wickes management team. The webcast can be accessed at: https://brrmedia.news/WIX_HY23
Dial in: +44 (0) 33 0551 0200
Password (if prompted): Wickes Half Year
A recording of the webcast will be available on the Wickes Group plc website later today: https://wickesplc.co.uk
Contacts
Wickes Headland +44 (0) 0203 805 4822
Investor Relations PR Adviser to Wickes
Andy Hughes +44 (0) 776 736 5360 Lucy Legh, Will Smith
investorrelations@wickes.co.uk 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 229 right-sized stores, which support nationwide fulfilment from convenient locations throughout the United Kingdom, and through its digital channels including its website, TradePro mobile app for trade members, and Wickes DIY app. 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.
Business review
Wickes delivered a resilient sales performance in the first half, benefitting from its market-leading value proposition and underpinned by its uniquely balanced business model. Despite a challenging market backdrop, we were pleased to report an increase in revenue with further strong performances from our Local Trade and DIFM businesses. DIY sales remained down year-on-year, although the pace of decline moderated in the second quarter. As expected, profits declined in the half, with cost inflation and investment costs (especially in IT) not fully offset by efficiency gains.
1 Do It For Me, our kitchen and bathroom showroom business
2 For a definition of LFL sales, see note 3 of the interim financial statements
3 For a reconciliation of this profit measure, and definition of these costs, see note 13 of the interim financial statements
4 For an explanation of the re-presentation, see note 2 of the interim financial statements
5 Source: GfK GB Point of Sales: DIY Total Store (Leader Panel) Reporting, year to date July 2023
6 Adjusted profit before tax and Adjusted basic earnings per share have been re-presented as disclosed in note 2 and note 8 respectively.
7 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 separating the business from Travis Perkins Plc’s IT systems, the impact of fair value movements on derivatives through the profit and loss statement, the effect of changes in corporation tax rates on deferred tax balances, and in FY2022 a reclaim of overpaid VAT relating to prior years. (See note 2 of the interim financial statements for a detailed explanation of these items).