Wickes: Tough market
Results 2024
Short description
Wickes is a British DIY chain, although they prefer the term "Home Improvement" because they don't solely target hobbyist handymen.
The company is a spin-off from the publicly listed Travis Perkins (TPK), a distributor of building materials and tools. TPK’s management wanted to focus more on business customers, which meant Wickes no longer fit within that strategy. Still, Wickes accounted for 20% of TPK’s revenue.
Wickes divides its business into two main segments: Retail and Design & Installation. The Retail segment covers the traditional DIY market, with a strong emphasis on online sales and collaboration with local contractors.
Wickes deliberately opts for a selective, high-quality product range, made up of both name brands and private labels. Their strategy isn’t about offering quantity, but rather simplicity and efficiency. Their stores typically stock around 9,500 products, while the online selection includes 17,500. In comparison, competitor B&Q (part of Kingfisher) offers more than 40,000 products and continues to expand that range — a clear difference in strategy.
The benefits for Wickes include simpler inventory management, lower handling costs, and reduced need for store space. This allows them to keep prices low. On top of that, Wickes’ stock turnover is nearly twice as fast as B&Q’s, which is an advantage in any retail environment.
Wickes is also active online. Customers can have products delivered or pick them up at the nearest store. Their 30-minute ‘click & collect’ service is a major strength. Still, any digital edge they might have should be viewed with some caution, as it may only be temporary in my view.
The Design & Installation division focuses on areas such as kitchens, bathrooms, and solar panels, which are installed by professionals.
Why we selected Wickes
The construction and DIY sectors are closely tied to the overall economic climate, and the same holds true in the United Kingdom. Historically, the market for building materials and tools has grown by 2.5% per year and is currently worth £25 billion.
This growth outpaces that of the gross national product. According to Wickes’ management, several factors contribute to this:
An ageing housing stock that drives renovation demand, as 80% of homes in the UK are over 30 years old.
A decline in the number of people skilled enough to carry out their own renovations, which supports the DIFM (Do It For Me) and Local Trade segments.
An increase in home sales also encourages renovation activity.
The ongoing trend of spending more time at home, even post-pandemic, fuels the desire to improve living spaces.
At the time of our purchase, Wickes was trading well below its replacement value — the amount a competitor would need to invest to build a similar business from scratch. In other words, buying Wickes was cheaper than trying to compete with it.