Wickes boss warns of inflation as sales surge at building merchant

Wickes CEO David Wood said he was 'delighted with how the entire business has responded to the continued strong demand for our products and services.' Photo: Getty Images
Wickes CEO David Wood said he was 'delighted with how the entire business has responded to the continued strong demand for our products and services.' Photo: Getty Images

Wickes (WIX.L) has had strong group sales so far in 2021 as lockdown restrictions ease, but its CEO warned of inflationary pressures.

The building merchant's total like-for-like growth In group sales were 45.7% ahead year on year in the 21 weeks to 22 May, and 23.1% up when compared to pre-pandemic figures from 2019.

CEO David Wood said he was “delighted with how the entire business has responded to the continued strong demand for our products and services."

He warned that “availability constraints and inflationary pressures across some raw materials have been well-flagged” but said the company has “strong supplier relationships and are working closely with them to ensure we continue to provide customers with the products they need at the best possible value."

This comes as Travis Perkins (TPK.L), the country's biggest builder’s merchant, warned of cost increases to raw materials "in a move that will fuel fears of an inflationary price spiral as the economy pulls out of its Covid-19-induced recession," The Times reported.

Read more: UK house price growth hits 10% in hottest month in seven years

Travis Perkins said there would be a 15% uptick in the price of bagged cement, 10% in chipboard and 5% in paint from this week.

It said “the market is facing considerable cost and availability challenges on a number of key commodity items at the moment”.

Wickes was separated from Travis Perkins through a premium listing on the London Stock Exchange earlier this year.

AJ Bell financial analyst Danni Hewson said: “The danger is that enthusiasm for domestic renovations hits the obstacle of prohibitive costs and delays, thus stopping the current boom in its tracks. This could leave Wickes exposed in a competitive market and remind investors why Travis Perkins was keen to spin off the business in the first place.”

Wickes' stock was up on Tuesday morning. Chart: Yahoo Finance UK
Wickes' stock was up on Tuesday morning. Chart: Yahoo Finance UK

Looking forward, the company said there remains uncertainty in the balance of full year outlook, but it expects half year adjusted profit before tax of around £45m ($64m) and full year adjusted profit before tax within the top half of the range of analyst expectations. The current range is £55m to £74m.

Following the re-opening of showrooms on 12 April, the company said it is encouraged by its kitchen and bathroom leads and order pipeline, which it expects will deliver strong like-for-like sales growth in the second half of the year.

“The company is off to a pretty impressive start, with sales growth tracking well ahead of not just last year’s pandemic-disrupted trading but also the same period in 2019, helping the company to make a good impression on the market by guiding for profit at the top end of expectations,” said Hewson.

Shares were up about 4% on Tuesday morning.

Hewson said Wickes "operates in a fragmented market which is benefiting from a post-COVID home improvement boom so now is a pretty good time to strike out on its own following its split from Travis Perkins."