Warm Easter holiday weather boosted seasonal sales of outdoor and gardening products and encouraged consumers to get out and spend on ‘big-ticket’ projects. Among the beneficiaries was DIY chain Wickes (WIX), where revenue grew 6.9% in the 17 weeks to 26 April 2025. The specialty retailer highlighted ‘strong volume-led’ retail sales, up 9.2% on a like-for-like basis.

Wickes, which opened its first UK outlet in Manchester in 1972, was demerged from builders’ merchant Travis Perkins (TPK) in 2021 and is now laying the foundations for growth as a standalone business. It has taken investors a while to recognise the Watford-headquartered company’s attractions, but if a share price testing fresh two-year highs is any guide, Mr. Market sees a sunnier outlook ahead for the topsoil, tools and tiles seller.

The stock gained further ground following a first-quarter update (13 May) which confirmed an improving trend in Wickes’ project-based Design & Installation division, which delivered a second consecutive quarter of order growth. Wickes’ Trade segment, which sits within retail and services local trade professionals, remains a source of growth for the company. TradePro sales were up 13% in the quarter, supported by growth in TradePro memberships, which increased by 14% year-on-year to 605,000, up from 581,000 at the previous year-end.

Shares had some preconceived notions about the timber supplies-to-decorating products play ahead of a recent briefing with CEO David Wood – our view was Wickes is dependent on DIY fads and fluctuations in big-ticket spending with highly seasonal earnings – and we had well-founded concerns over both cost headwinds and competition, since Wickes locks horns with companies ranging from Kingfisher (KGF)-owned B&Q and Screwfix to Selco, Home Bargains, Topps Tiles (TPT), The Range, B&M (BME) and Toolstation to name but a few.

As such, this correspondent jumped at the opportunity to converse with Wood and discuss the merits of the investment case with an experienced retail and consumer sector executive.

BUILT TO LAST

What are the DIY-store operator’s key competitive strengths, asks Shares? Wood politely pulls the author up on this characterisation of the company, which he describes as a home improvement retailer and about so much more than DIY.

‘We operate in the £28 billion and growing UK home improvement market and we’ve grown our business to about £1.6 billion, so there’s still plenty of headroom for growth in a market that continues to consolidate,’ insists Wood.

The enthusiastic boss explains UK market growth is underpinned by the fact we are a property-owning democracy, and Britain’s 29.8 million homes are among Europe’s oldest and least energy efficient, so there’s a constant requirement for repair and maintenance Wickes can capitalise on. And with people working more at home in recent years, even renters have stepped into the DIY market, ‘to freshen up the place where they are spending more time working or socialising’.

Wickes has been around for decades, so just how big is the kitchens, bathrooms and building materials purveyor’s growth potential, wonders Shares aloud? ‘We are at £1.6 billion of sales or about 6% to 7% market share, so there’s a long runway,’ says Wood, who wants to grow the top line to £2.5 billion and beyond. ‘We’ve got 230 stores, we’d like to get to somewhere between 250 and 260 stores, and there may be more, with average sales per store of £10 million. Today, it’s about £7 million,’ he explains.

Another growth opportunity Wood is palpably excited about is the fast-growing yet fragmented home energy solutions market, where this trusted national brand is helping customers improve the energy efficiency of their homes and save money on their energy bills. Last year, Wickes acquired a majority stake in solar installations business Solar Fast, which also boasts a smaller business installing gas boilers.

Wood says the UK is going to have to retrofit rather than build its way to net zero. ‘That’s all about retrofitting solar panels, air source heat pumps, batteries, inverters, EV chargers,’ he enthuses. ‘If you just take those five products alone, we believe in five years that will be a £10 billion incremental market.’

Capturing 10% or 15% of this other market would double the size of the company, he insists. ‘We have big ambition, but I don’t have to take much of that market to put quite a growth accelerant on the business.’

DIFFERENTIATED & DEFENDABLE

Major competitors which have disappeared from the market include Wilko, Homebase and Carpetright, presenting an opportunity for a strong business of scale such as Wickes. Nevertheless, competition for the spoils remains intense, so Shares wants to know who Wood views as Wickes’ main rival. ‘There’s no one competitor we face, because we have this uniquely balanced business with Trade, DIY and Design & Installation,’ he answers. ‘An engine room of success for our business more recently has been Trade. The average Trade customer is worth 10 times that of an average DIYer, so there’s a real benefit of winning with the trade in the first instance.’

Wickes’ head-honcho also emphasises the business is digitally led with roughly two thirds of sales emanating from its digital channels. ‘But the real magic is 98% of the fulfilment comes from the physical estate,’ says Wood, ‘because every one of our stores is a last-mile fulfiller into its local community. Our store network doesn’t need to be as prolific as competitors in this market because of our digital and home delivery strengths. The catchment area of one of our stores is far bigger than most others.’

Wood continues: ‘When I talk about our stores, I say we are like the Aldi of home improvement. Our stores are quite a small store footprint versus the market at large. And within that footprint, we house a highly curated range. We only hold about 9,000 products in store, whereas most of our competitors will hold anywhere between 30,000 and 50,000 products. And two thirds of our sales are own brand.’

What specific advantages does this tight range confer upon the paints-to-power saws purveyor? ‘It brings buying benefits you can pass on to the customer in terms of market-leading prices,’ explains Wood. ‘And the inventory itself is more efficient, so the average stock turn in our business will be two to three times faster than the industry at large. This is a really efficient, lean, low-cost model.’

COSTS & THE CONSUMER

Wood is at pains to point out Wickes is not exposed to new build as a sector. Rather, the focus is on repair, maintenance and improvement. ‘Our end-markets are homeowners who are improving and maintaining the current properties they have.’ Next, I grill the CEO on the potential hit to the screws-to-sealants seller’s earnings from tariffs. Where does Wickes source the bulk of its products from? Wood assures me about 70% of this UK-only retailer’s goods are in fact domestically sourced, with exposure to Asia limited to the 7% ballpark.

‘We are really insulated in that way, and we don’t operate in the big seasonal categories, we are a very non-seasonal business. If you were to tip your house upside down and give it a good shake, everything that stays in would be Wickes, everything which falls out would be from the other home improvement retailers.’

THE MAN WHO BROUGHT WICKES TO MARKET

Wood joined Wickes in May 2019, drafted in to lead the spin-out from Travis Perkins onto the Main Market. A trained accountant who knows his way around the profit and loss account and balance sheet, Wood has amassed almost 30 years in the retail and consumer sector, and boasts extensive board level experience in the UK, Europe and North America, having spent the bulk of his career with Tesco (TSCO), Unilever (ULVR) and Mondelez (MDLZ:NASDAQ).

He tells Shares the separation has afforded Wickes an abundance of opportunities. ‘This business has consistently outperformed the market for growth because the cash we generate, we get to invest in our proven growth levers. And we’ve been able to acquire a business (Solar Fast). Some of that might have been more challenging in a non-retail group where retail would have been lower on the priorities for capital allocation.’

POSITIVE MOMENTUM

For the year to 28 December 2024, Wickes delivered adjusted pre-tax profits of £43.6 million. That was down from £52 million a year earlier, but at the upper end of market expectations and a pretty resilient showing given weaker consumer demand for big-ticket items and the operating cost inflation the company had to shoulder.

And while the dividend was held at 10.9p, Wickes launched a fresh £20 million share buyback, its second since the demerger, having completed a £25 million buyback programme which began in 2023.

In its latest update, Wickes said it remained ‘comfortable’ in meeting this year’s £47.7 million consensus pre-tax profit estimate, despite higher labour costs and what Wood called a ‘challenging external environment’. How has Wickes mitigated the impact from wage and national insurance increases and what is Wood’s assessment of the UK consumer? ‘You always need a degree of nimbleness and agility in the retail sector,’ he chuckles, ‘particularly when you are looking at your opex (operating expenditure) base, but our focus on productivity is just inherent in the business.’

On the consumer, he concedes there is still uncertainty out there and DIYers are being ‘a little bit thrifty and taking on smaller projects. Our Design & Installation business is more muted, but we are encouraged by the fact there’s excess savings in the economy and as interest rates start to come down, it might release some of that.’

WHAT ANALYSTS ARE SAYING?

With a 250p price target on Wickes, Canaccord Genuity forecasts a near-9% rise in adjusted pre-tax profit to £47.5 million this year, building to £57 million and £65 million in full-years 2026 and 2027 respectively. Based on the broker’s earnings estimates for 2026 and 2027, Wickes trades on forgiving forward price-to-earnings multiples of 11.7 and 10.3 respectively even after a recent rally and offers investors an attractive 5% dividend yield.

Canaccord Genuity scribe Mark Photiades believes the retailer’s valuation remains ‘too low given opportunities for further growth from store expansion and organic initiatives, especially within TradePro. The development of TradePro, combined with other organic growth initiatives, should position the group strongly as and when underlying housing market conditions improve.’

At Investec, retail guru Kate Calvert is also bullish on the stock with a ‘buy’ rating and 329p price target and sees ‘upside risk to our forecasts given momentum, with potential to double profit before tax when demand picks up’. Analysts at Peel Hunt believe that longer term, Wood’s strategy is ‘clearly delivering and the investment plan remains on track. With five-to-seven new stores set to open this year (including four Homebase conversions), the group looks well placed to benefit from continued recovery in its end-markets.’

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