Wickes (WIX) shares soar 9% on profits upgrade
09:34, 3 December 2021
Wickes shares shot almost 10% higher this morning as the home improvement retailer revealed new pre-tax full-year profits guidance of £83m ($110m). Shares for the DIY chain closed at 215p yesterday but were selling for 236p this morning.
Although core sales were down its sales were still ahead compared to 2019 – pre-pandemic. Wickes says supplier relationships helped a better-than-expected margin performance. “We have been able to mitigate the pressures resulting from rising inflation and freight costs, while continuing to deliver excellent value for customers.”
"Very strong" – City analyst
Analyst Wayne Brown from Liberum described the Wickes update as “very strong”. He went on: “Encouragingly sales remain in line with expectations. This means we will have upgraded full-year profit before tax by c.50% since our initiation in April.”
Brown added: “We continue to see the shares as far too cheap (CY21 price/earnings ratio 10 times), for the high quality growth, profit momentum and strong cash generation on offer, with y/e net cash (pre-IFRS 16) likely to exceed £160m.”
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Trading uncertainty still hangs about
Whilst the recent changes to UK Government COVID-related guidance are unlikely to have a material impact on performance over the balance of the year “the trading environment continues to remain uncertain and we will monitor the situation closely” Wickes said.
Wickes demerged from Travis Perkins with its own listing in April though the IPO came as a type of Travis Perkins dividend to investors – an unusual listing route.
Read more: Can listing reforms shake up the UK's sclerotic stock market?
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