Wickes like-for-likes drop 7.6% in the first seven weeks of 2013 due to strong comparables and poor weather

Wickes like-for-likes dropped 7.6% in the first seven weeks of 2013 which it said was due to strong comparables and poor weather. This compares to a like-for-like fall of 5.6% last year.

However, Travis Perkins remained upbeat for the second half. It said that while it expects the market to remain volatile in the short term, it anticipates conditions will improve in the second quarter.

It said: “Whilst this suggests difficult conditions will remain in the first half year, there are reasons to be more optimistic about the second half. The recent rise in mortgage and housing transaction activity should feed into improved volumes in the market by the second half.”

The consumer division made £65m ‘adjusted segment profit’ in the year to December 31, up 41% on last year as the DIY retailer focused on “careful margin management, strong overhead control and targeted investment”.

Turnover in the consumer division increased 13% to £1.15bn, driven by the Toolstation acquisition.

If Wickes sister retailer Toolstation is excluded from the 2012 result, divisional turnover was flat year-on-year, whilst profits increased by 26.5%.

Travis Perkins said: “Our consumer division has significantly outperformed in 2012, with the Wickes, Tile Giant and Toolstation businesses all producing excellent results.  The consumer division markets were the hardest hit of any that our divisions operate in, so that makes the result achieved in 2012 even more encouraging.”   

Wickes kept costs down by “changing the store colleague structure late in 2011 and from re-targeting marketing spend”.

Travis Perkins chief executive Geoff Cooper said: “Despite continued tough conditions in construction markets, Travis Perkins has made good progress, with increases in overall turnover and profits, continued strong cash generation and further development of our networks and services in the UK and the launch of a small scale trial in continental Europe.

“Whilst there are indications, for the first time in a while, that growth will return to our markets later this year, we anticipate volatile conditions will persist in the short term, further troubling weaker operators.

“A gradual recovery in our markets, together with targeted like-for-like volume outperformance and tight control of costs should deliver an expansion of our operating margins. The group has an excellent track record of deploying self-help initiatives to achieve these goals, and our position as the UK’s leader in building materials strengthens our position and prospects.”

Group revenue was up 1.4% to £4.8bn while like-for-likes dropped 1.4% last year.

Adjusted operating profit increased 4.3% to £327m, while adjusted pretax profit was up 1.1% to £300m.

Joseph Robinson, Lead Consultant at Conlumino, said: “Wickes is a good retail business, with a loyal customer base buying into its strong competitive advantages, namely: low prices, differentiated own-label ranges and its customer service credentials. Moreover the last couple of years have seen the business make some very positive strides in new product areas – such as kitchens and bathrooms– where capacity falling out of the market has created opportunities.

“Nonetheless a 7.6% decline in like-for-like sales during the first seven weeks of its 2013 financial period – albeit impacted by poor weather and tough comparatives – point to another tough year ahead. While it’s difficult to pinpoint many fundamental issues with Wickes’ current strategy, until core markets stabilise, its performance is likely to continue to zig-zag.”