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Wickes: Was the demerger a success?

By Rob Griffin

08:22, 14 April 2022

Outside of a Wickes store
What is the outlook for Wickes (WIX)? – Photo: Shutterstock

It’s been almost a year since Wickes (WIX), the UK home-improvement retailer, demerged from builders’ merchant Travis Perkins (TPK) and became a standalone listed company.

The idea of the split was to give both management teams the freedom to pursue their own independent long-term strategies.

But our analysis reveals the stock prices of both companies have fallen sharply over the past 12 months – so what has happened?

Falling share prices: why?

The Wickes stock price has slumped 24% from its 263p level on 28th April, 2021 – its first day of trading – to 199p during early trading today (14th April 2022).

The Travis Perkins stock price, meanwhile, has fallen almost 20% over the same period, having gone from £15.45 to £12.51.

Obviously, this makes depressing reading for investors in both companies, but are there justifiable reasons for the falls?

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Covid after-effects

The first possibility is that both companies have become less enticing to investors since the UK Covid-19 lockdown restrictions were lifted.

Being stuck at home during the pandemic was enough to inspire people to finally start long-postponed home-improvement projects.

However, the relaxation of the rules has enabled them to pursue other interests, as well as to return to the office. As a result, time and enthusiasm have both been more limited.

Inflation impacts

According to Danni Hewson, financial analyst at AJ Bell, high inflation has resulted in many investors shunning consumer-facing businesses that could be adversely affected.

“Wickes and Travis Perkins fall into that category, and it’s no surprise to see that shares in both have taken a hit since the start of the year,” she told “As cost pressures mount, people will think twice about embarking on home improvements that can wait.”

In addition, the rising prices of labour, materials and energy will all be nibbling away at the profit margins of both businesses.

However, Hewson acknowledged they could benefit from repairs needing to be carried out and an ongoing desire for house improvement. “Home is where the heart wants to be content,” she added.

“People will try and shuffle other commitments to make their everyday lives that little bit more comfortable.”

How Travis Perkins has performed

Travis Perkins reported a 24% increase in revenue to £4.58bn ($6bn) and adjusted operating profit up 175.8% to £353m for its 2021 full-year results.

In a statement, chief executive Nick Roberts branded 2021 a year of “significant operational and strategic progress” for the group.


2,399.45 Price
-0.520% 1D Chg, %
Long position overnight fee -0.0193%
Short position overnight fee 0.0111%
Overnight fee time 21:00 (UTC)
Spread 0.60


66,058.30 Price
+0.260% 1D Chg, %
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0.63 Price
+4.790% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
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3,373.26 Price
-3.200% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

“While the rapidly recovering market created challenges around inflation and product availability, we have navigated them well to deliver an outstanding financial performance, enabled once again by the hard work of our fantastic colleagues,” he said.

The performance of Wickes

Wickes revealed revenue for the full year 2021 was up by 14% to £1.53bn ($2bn), while its adjusted operating profit came in at £116.3m – 7.6% up on the previous year.

Chief executive David Wood said it had been a year of excellent growth, with the strategy being to deliver strong growth and return on investment.

“Looking ahead, we expect to continue outperforming the market and are well-placed to capitalise on the ongoing requirement for home improvement – namely an ageing housing stock, favourable consumer trends, and the increased focus on insulating and retrofitting homes,” he said.

Stock predictions

WIX stock is a ‘buy’ based on the views of five analysts whose consensus view is the price could rise by 78% to 354p over the next 12 months, according to MarketBeat.

The highest price target is 450p, while the most pessimistic suggest it could be as low as 280p. However, even this would be 40% higher than the current 199p level.

Travis Perkins is also rated a ‘buy’ on MarketBeat, based on the views of 13 analysts who believe the stock will rise 50% to £18.79 over the coming year.

The price targets suggested range from £15.45 at the lowest end to £21 at the top.

Analyst’s view of Travis Perkins’ outlook

Sam Cullen, equity research analyst at Peel Hunt, has a ‘buy’ recommendation on the stock and a target price of £18.50, having increased his full-year 2022 profit estimates.

“Travis Perkins remains well placed to benefit from continued strong demand in the RMI [repair, maintenance and improval] market, while demand is now also coming back in the Commercial and Social housing space,” he said.

Cullen also sees the share price as undemanding.

“Given its strong balance sheet and track record of excellent cash generation we see scope for additional capital returns over the medium term, perhaps as much as £500m,” he said.

Outlook for Wickes

Wayne Brown, an analyst at Liberum, says the outlook remains much the same as in 2021 for Wickes, with robust demand, visible order-book demand and strong tailwinds.

He believes the company has laid out a clear capital allocation policy that puts market share gains and growth first and foremost, but also allows for increased cash returns in the future.

“Since the demerger, its shares have had a steady decline,” he said. “However, recent momentum has shifted, and to us, this should be a signal of things to come, with Wickes potentially obtaining the rating it deserves.”

Markets in this article

Travis Perkins
9.47 USD
0.01 +0.110%
Wickes Group plc
1.4770 USD
-0.002 -0.140%

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