Wickes, a home improvement company, has warned that its energy expenses will increase by more than £7 million next year.
Wickes’ overall like-for-like sales increased by 2.6% from July to September, compared to 0.8% for the first half of the year.
The DIY division’s flat sales were offset by a 12.2% increase in its ‘do it for me (DIFM) arm, as the boom in home renovations experienced during the epidemic continues to recede.
Wickes, which provides end-to-end services from design to installation for items such as kitchens and bathrooms, stated that its “order book” was full.
However, DIFM orders decreased in the third quarter compared to the same period last year, as customers “took longer to commit to large-scale projects.”
The group’s profit projection for the year remained unchanged at £72-£82 million, but rising inflation and poor customer confidence continue to create uncertainties.
If the existing price cap for businesses remains in place, the company estimates its energy expenses to be £7.5 million more in 2023, when its contract expires in March 2022, than they are now.
Victoria Scholar, head of investments at interactive investor, stated, ‘The post-pandemic DIY boom is waning, and inflation is rising, putting downward pressure on demand and upward pressure on costs, squeezing the retail industry during the cost-of-living crisis and in advance of a possible recession.
Despite this, Wickes has been able to control inflation by boosting prices, which has helped raise third-quarter revenue.
Wickes stated that since the first half of the year, the rate of retail price inflation has “moderated” in part due to a decline in the cost of timber.
The company also reported that its local trade sales had done well, with its TradePro discount program gaining 10,000 new customers every month, for a total of over 720,000.
DIY stores, who were among the biggest epidemic winners, have warned of a decline in demand as consumers tighten their purse strings.
This week, Travis Perkins, a supplier of building supplies, reported an increase in sales but a decline in demand from smaller trade customers.
Kingfisher, the parent company of B&Q and Screwfix, announced a 28% decline in first-half profit last month, as DIY demand continues to decline and the cost-of-living problem affects consumer spending.
Friday afternoon trading saw shares in Wickes decline by 4 percent to 119p. Since the beginning of the year, they have decreased by about 50%.
