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Wickes confident despite sales drop

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Core product sales at DIY retailer Wickes were 3.3 per cent down on a like-for-like basis during the six months to June 30th, contributing to a 0.5 per cent reduction in overall turnover.

Sales of kitchens and bathrooms, especially in the first quarter of the year, were strong though, with like-for-like turnover up 11.6 per cent on the back of an effective advertising campaign and the introduction of new ranges.

The business’s parent company Travis Perkins said that the group, which also owns Tile Giant and ToolStation, performed ahead of its expectations in the first half of the year with both merchanting and retail divisions increasing their market share and helping push up pre-tax profits at the group to £122 million.

Wickes itself opened three new stores during the period and overall revenues grew by 1.7 per cent, while there are an additional two shops scheduled to join the chain in the coming months, which has fuelled a feeling of optimism.

CEO of Wickes Geoff Cooper said: “We remain determined to further develop our customer propositions via an exciting programme of organic growth initiatives with the aim of stretching our lead over competitors.

“While we continue to see modest market growth following a severe recession, we view the future with confidence.”

One problem companies like Wickes may face in the months ahead is dwindling sales of kitchens and bathrooms. Consumers’ interest in big ticket items like these has dropped as the year has moved on, with B&Q also noting similar sales trends.

Earlier this month, the Kingfisher-owned DIY retailer said that a lack of customer interest in making major purchases was a key reason for its like-for-like trading dip.

However, the 0.8 per cent fall in sales for the ten weeks to July 10th was still an improvement on the 1.8 per cent decline recorded in the first quarter of the year.

Nev Prevett, Retail Analyst at GfK Retail and Technology, which tracks point-of-sale data in consumer goods and entertainment markets, expects this year’s DIY retail market “to remain relatively flat in value terms, diluted by heavy promotions”.

“Volume overall is still in decline and I would expect to see this continue throughout the year,” he explained.

Figures from GfK Retail and Technology’s DIY Total Store Report, which tracks industry sales on a monthly basis, show that year-on-year DIY trading increased by six per cent in March, but sales in every other month of 2010 have either remained flat or dropped, compared to 2009.

Reflecting on what DIY retailers can do to encourage more customers through their doors, Prevett added: “From everything we’re able to see from Retail Audit, promotions seem to be key.

“However in key seasonal sectors, for instance garden, supermarkets have been very aggressive in 2010 and captured the convenience consumer - this has impacted DIY sheds harder than any other channel.”

Published on Thursday 29 July by Editorial Assistant

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