Wickes is looking to new younger customers who rent their homes to help fill the gap left by the fading pandemic home improvement boom.

The retailer is the latest DIY firm to reveal slumping profits. The group, which also trades as a builders’ merchant, posted a 38.4 per cent drop in pre-tax profits to £40.3 million for 2022 and cautioned that sales have also started 2023 on the back foot.

On an underlying basis, pre-tax profits dropped 11.3% to £75.4m.

However, David Wood, Wickes chief executive, said in an interview with Reuters that “people that don’t own their homes are actually improving the home that they rent and live in, and we’re doing really well here as 18 to 35-year-olds are our fast growing cohort of customers”.

The company, which has sites across Scotland including in Glasgow and Edinburgh, said: “We launched our Wickes eBay store during the year with 4,000 lines, extending our customer reach to a younger audience.

“We are currently looking at opportunities with marketplace platforms, including eBay, to extend our range accessibility to a wider audience of home improvers.

“We also now offer Klarna as an online payment solution.”

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Mr Wood pointed to the firm notching up record revenues of £1.6 billion, up 1.8% on 2021, but saw its core like-for-like sales ease back 2%, with the group suffering steep declines at the start of the year as trade eased back from the surging demand seen during the pandemic.

Wickes added that core sales in the first 11 weeks of 2023 remained “moderately behind” a year ago as DIY demand continues to “normalise”.

It comes after rival, B&Q owner Kingfisher revealed earlier this week that annual profits fell by more than a fifth and warned it expects an even steeper decline in 2023.

The sector has seen profits plummet from their pandemic highs when people stuck at home were investing in their living spaces, while costs have also eaten into bottom line earnings.

Wickes said 2022 “proved to be a challenging year for the market, driven by well-documented challenges facing the consumer”.

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“The need to combat rising inflation has seen UK and global interest rates rise and, as a result, house price inflation and transaction volumes are now starting to moderate,” it said.

It said it expects the “softer economic environment” to continue throughout 2023.

Mr Wood also said: “Like all businesses we remain watchful of the external consumer environment.

“However, we have the right strategy and a compelling offer for customers, and look to the future with confidence.”

Wickes also believes the sector is still a “large and attractive market”, boosted by households looking to boost energy efficiency of their properties, as well as hybrid working increasing time spent at home.

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Wickes had seen sales rebound at the end of last year as homeowners rushed to buy energy-savings products, such as loft insulation and draught excluders, to help cut heating and power bills.

“Many businesses have retained hybrid working practices, increasing time spent at home, fuelling further desire for homeowners and tenants to invest in their properties,” the firm said.

“Despite the unwinding of Covid influences we have continued to grow the proportion of our digitally-enabled sales on a year-on-year basis.

“We completed a number of enhancements to our digital capabilities in the year, including greater use of push messaging, personalisation and targeted campaigns across our digital channels.

“Underpinned by our predictive Missions Motivation Engine, which is generating identifiable incremental sales, we have also stepped up the digital experience for our trade customers, increasing the levels of engagement throughout the project journey.”

However, it said it was forced to put up prices by 13% in 2022 - 15% in the first half and 10% in the final six months - as timber and cement costs in particular soared.

It has seen material prices rise more slowly recently thanks to falls in the cost of timber, with inflation easing back to 9% in the three months to the end of December.

Wholesale energy prices are also falling, but it still expects its gas and electricity bill to be around £10m higher in 2023, including costs from switching to fully renewable energy, and is putting in place cost-saving plans to offset the rise.

Neil Shah, executive director at Edison Group, said: “The company has achieved record sales for 2022, benefiting from being a strong market leader while maintaining its class-service to customers across the UK.

“The market during 2022 proved to be challenging for many companies, seen through the macroeconomics and high inflation. Despite the weaker economy Wickes have proved to come out stronger from this, as they are able to maintain a structure that enables them to excel through market challenges.

“The company has proved they are able to navigate tough markets, and if continued throughout the following year, shall remain as successful or more in the following year to come.” Shares in Wickes closed down 2.3p, or 1.59%, at 142.7p.