Wickes has warned its energy bill is set to soar by £7.5m next year as it flagged the impact of “uncertainties” surrounding operating cost inflation and consumer confidence.
The DIY chain cautioned that its cost base would be hit by rising utility bills once its energy contract ends in March next year.
It said it would be hit with the additional £7.5m bill – which would represent around 10% of its forecast pre-tax profit this year – “if energy costs were to remain at the current price cap for businesses”.
Government support for businesses on energy bills is set to be reviewed in April.
Wickes sounded the alarm on energy bills as part of its third-quarter trading update.
The retailer reported a 2.6% uptick in like-for-like sales during the 13 weeks to October 1. Core retail sales were flat year on year but ‘do it for me’ sales jumped 12.2% as Wickes worked through “an elevated order book” of home improvement projects.
However, it cautioned that the number of ‘do it for me’ orders placed during its third quarter was down year on year, since “customers are taking longer to commit to big-ticket projects”.
Wickes also noted a “moderation in the rate of retail price inflation” since its first half, pointing to reductions in the cost of timber.
The business maintained its full-year guidance for adjusted pre-tax profit, which it expects to be between £72m and £82m.
Wickes chief executive David Wood said: “This has been a period of further progress across all parts of the business, with customers and tradespeople continuing to come to Wickes on the strength of our value, availability and service.
“While we are watchful of external headwinds, we are continuing to focus on our growth levers and on maintaining rigorous control of our costs. Our uniquely balanced business model leaves us well placed to continue to outperform the market.”
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