- Earnings at top of estimate range
- Company sees return to growth
- £20 million shares buyback to come
Investors in home improvement retailer Wickes (WIX) were celebrating after the firm posted full-year earnings at the top of expectations and announced a £20 million buyback.
The shares, which have been in a steady uptrend since the middle of 2024, jumped as much as 14p or 7% to a new 12-month high of 185p.
RESILIENT PERFORMANCE
For the year to December, the DIY-store operator reported total revenue of £1.54 billion against £1.55 billion previously, despite ‘challenging market conditions’ for its Design & Installation business.
Adjusted pre-tax profit was £43.6 million against £52 million previously due to weak consumer demand for bigger-ticket items and operating cost inflation, but this was still at the top end of forecasts.
Moreover, the firm ended the year with a net cash balance of £86.3 million, allowing it to pay a final dividend of 7.3p – making the total payout 10.9p per share or a yield of 6.4% on yesterday’s closing price – and announce a further £20 million buyback after last year’s £25 million repurchase.
Turning to current trading, like-for-like retail sales remain in positive territory while Design & Installation is experiencing positive order growth for a second successive quarter.
Chief executive David Wood commented: ‘2024 was a year of strong progress for Wickes as our balanced business model and brand strength saw us continue to deliver for customers and take further market share.’
Wood added: ‘Given the strong progress over the last twelve months and the good start to Q1, we are well on track for the coming year.’
WHAT ARE ANALYSTS SAYING?
Ben Hunt and colleagues at Panmure Liberum were upbeat and believe there is more positive news to come: ‘We continue to argue that Wickes’ profit base is increasingly supported by high-quality, recurring revenues from TradePro, where momentum remains strong and further upside potential exists.
‘Additionally, the Design & Installation business appears to be turning around, suggesting consensus expectations may be too low. Pent-up demand here could drive around 40% upside to 2026 pre-tax profit forecasts.’
David Hughes at Shore Cap suggested 2024 represented the ‘nadir’ for profits, with current trading looking positive, ‘encouraging’ momentum in Design & Installation and management guiding to a return to earnings growth this year.
The shares’ valuation ‘look undemanding for the sector, particularly if the company is able to successfully return to revenue growth,’ added Hughes.
