The UK stock market is about to get another retailer and for once it isn’t an online clothing seller. Travis Perkins is making progress with demerging Wickes, with the intention of listing its shares in London soon.
DIY companies have been milking the benefits of people being stuck at home during multiple lockdowns, with more attention being paid to cracks in the wall, broken doors, wobbly gates and so on.
“The problem with Wickes is that a good chunk of its business also comes from the ‘do it for me’ channel, and that’s not done so well during the pandemic. Restrictions on showroom openings have meant that Wickes couldn’t show off its wares and thus sales have been hit,” said AJ Bell’s Russ Mould.
“While DIY sales have continued to be good, it’s suffered the same fate as supermarkets in having to incur extra costs to keep staff and customers safe. Delivery costs have also been a drag, which suggests profit margins are being squeezed.
“Wickes is eager to talk up its situation, saying it expects to deliver sales growth ahead of its markets this year, but its overall success has a lot riding on the consumer spending big once lockdown restrictions are lifted.
“It is banking on pent-up demand to translate into sales of new kitchens and bathrooms. That’s not a given, and so Wickes could start life as a standalone listed business in a position where management risk disappointing investors if the hoped-for sales burst falls flat.”