Wickes Group plc

Well, good morning everyone and thank you for joining us here today and also for those of you who are joining by webcast. I'm here with our CFO, Mark George, and together we would like to take you through the performance of the business for the 2024 year, as well as highlighting how our distinctive business model and proven growth levers continue to drive market outperformance and present us with great opportunity in the UK's large home improvement market. 2024 has been a good year for Wix. Another year where our balanced business model has helped us deliver a strong performance and outperform the market. In our retail business, the increase in total revenue has been driven by volume growth as we attract more customers and we have accelerated our market share gains. As we have signposted on our last two trading updates, we are seeing an improved performance in our design and installation business, driven by our own actions rather than any uptick in the market. I am also delighted to report an adjusted profit before tax at the upper end of market expectations at £43.6 million. I'd like to take this opportunity to thank all of my fantastic colleagues for their incredible work in delivering these results and as always helping the nation feel house proud. It is clear that our continued investment in our proven growth levers is delivering results. We have grown TradePro sales by 14% in the year and have made a number of interventions in our design installation value chain which are working well and have translated into a return to ordered sales growth. We are seeing real gains in productivity as our investments in technology bear fruit. And Mark will share a good example of this with you shortly. And our new store opening and refit plans are driving further sales growth with strong returns. Our resilient performance and confidence in our growth strategy ensures that we continue to deliver attractive returns to shareholders. And I'm pleased to announce that we have maintained our final dividend at 7.3p and will be commencing a new 20 million share buyback. We are a business that is committed to growing responsibility and it was great to be recognised for all of the work we do as part of our Built to Last campaign. responsible business strategy with entry into the FTSE for Good Index earlier this year, along with highly positive sustainability ratings from both CDP and MSCI. At the beginning of 2025, we have seen good trading and continued positive momentum in both retail and order design installation sales growth. I'll now hand over to Mark to take you through some of the numbers in more detail.

Thank you, David, and good morning, everyone. As David mentioned, we had a strong performance in 2024, particularly in light of the tough trading conditions. And on this page, we have some of the headlines. Revenue for the year was £1.54 billion, down 1% versus 2023. Within that, retail was up 1.9%, and design and installation delivered sales down 10.5%. Despite the drop in sales and considerable cost inflation, we delivered a resilient profit performance with adjusted PBT of £43.6 million. We continue to operate with a strong balance sheet, ending the year with £86 million of cash, and across the year we held an average of £144 million. This profit performance and our strong balance sheet have enabled us to continue delivering good returns to shareholders. We've maintained our full year dividend of 10.9 pence per share, and we completed the first 25 million share buyback back in September. We'll break out more detail in the next few slides, but here we have a summary of our P&L. Good performance in retail helped to offset the decline in design and installation sales that were driven by lower demand for big ticket items, with the net position being a small decline in total revenue. On gross margin, careful management of pricing and promotions has enabled us to deliver really good positive volume growth. And that positive volume growth gets support from suppliers, and that support helps us to maintain a good gross margin. So you can see there we're up 16 basis points, which I think is a good outcome in this kind of tough trading environment. On costs, we managed to largely offset the significant cost inflation with our efficiency initiatives, which will continue to provide benefit for us in the years to come. These initiatives helped us to limit the year-on-year fall in PBT down to 43.6 million. So let's look at some of the P&L drivers in a bit more detail, starting with sales. So in the retail side of the business, we delivered another good year of progress, most clearly demonstrated in our market share position, which continued to strengthen, and David will cover this in a bit more detail later. we saw good positive like-for-like growth across the year driven primarily by the continued success of our TradePro scheme. The number of active TradePro members increased to 581,000 and TradePro sales grew by 14% in the year. As you can see from the table on the right of this chart, this growth in retail like-for-like has encouragingly been driven by volume as we've been managing deflation through the year. we anticipate moving into mild positive inflation during 2025. So overall for retail 2024 is another period of encouraging steady growth. In design and installation, our sales performance improved over the course of the year. The best guide to how we're trading at any point for design and installation is the value of new orders coming through. For most of the year, ordered sales were in decline, but following a number of actions taken in the business, we saw this decline slow and then move into year-on-year growth in Q4. Revenues reported on delivered sales, which come with a lag following ordered sales as we work through the order book. As you can see on the chart, the rate of year-on-year decline in delivered sales slowed in the second half as ordered sales started to improve. As we move into 2025, if ordered sales continue to remain in growth, and they have done so far in the first 11 weeks, delivered sales will start moving into growth as well, although not in Q1 because of the time lag. David will talk more about what we've done with our D&I business in a moment. But the encouraging thing is that we believe the move into positive year-on-year growth in orders has been achieved before the market has turned, which means momentum can build as the demand for bigger ticket items improves. The profit bridge on this slide shows quite clearly the difference between the retail performance and the design and installation performance and how that feeds through into profit. As a reminder in this chart, distribution costs are taken out of margin and we just show the trading margin. As you can see, we increase the profit from the retail side of the business. And this came from a combination of sales growth and higher margin rates. The decline in design and installation sales, of course, has a negative impact on trading profit. However, if the design installation business continues on its more recent positive trajectory, it will no longer be the drag on profitability that it has been in the last couple of years. On costs, we've delivered productivity plans that have broadly offset the cost inflation, which has been considerable in the year, particularly in wages with the significant increases in national living wage levels. Initiatives in distribution, store productivity, energy efficiency, lower shrinkage have all contributed to these savings. It's important to stress that our cost savings are embedded and permanent in the business and therefore support the profitability in future years. They're also designed to support, not detract from the customer experience and that's very important to us. And to illustrate this point, we thought we'd share an example. In 2022, we implemented a new demand forecasting and stock management system that uses machine learning to predict sales and therefore stock requirements. The benefits of this investment have been building through 2023 and 2024. And what's encouraging is that we're seeing improvements in product availability to customers in store whilst reducing the amount of stock in our end-to-end supply chain. Not only is this stock reduction good for working capital, but it's helped us to reduce the overflow storage capacity we use with third parties by around 70% over two years. So it's driving P&L savings as well. So a real win-win. Improved customer experience and lower cost for the business. Turning to cash, we are a cash generative business, even at what we think will be the low point in the economic cycle. As you can see here on this chart, we generated positive cash flow after the 26 million pounds of capex investment invested in the business. Now, this cash flow and our strong balance sheet give us flexibility to invest further in growth initiatives, for example, the acquisition of Solarfast, and to accelerate returns to shareholders. In 2024, we returned £41 million to shareholders in the form of dividends and the completion of the first £25 million of our share buyback programme. We ended the year with £86 million of cash. As planned, this was lower than the end of the previous year due to the buyback and the higher than policy dividend payout. It's worth noting that our average cash position during the year was considerably higher at £144 million, with December being a seasonal low point in our working capital cycle. Now, this strong cash position is enabling us to continue with our programme of accelerated shareholder returns. As a reminder of our capital allocation policy, we have four components to that. We aim to have at least £50 million of cash at the year-end low point, We'll invest into proven growth levers where we can get good returns. We have a target dividend cover range of 1.5 to 2.5 times, although we're paying above that at the moment. And any excess cash will return to shareholders. We completed the first 25 million buyback in September, and this morning we announced a further 20 million buyback to start in the next few days. Before coming on to Outlook, I wanted to explain a change in the way that we're going to be presenting our revenue segments going forward. Up until now, our design and installation revenue, bathroom projects that were sold from our bespoke showroom range, plus any lifestyle projects designed by one of our design consultants. Any lifestyle products that were sold off the shelf without a design had been up until now included in retail sales. In 2024, we started to present our offer to customers a little bit differently. Instead of separate brochures for bespoke and for lifestyle, we now have a single brochure for Wix Kitchens. We made similar changes to the online journey. Increasingly, customers are shopping between the ranges and actually creating projects from across the range. So as a result, we plan to change the way we report revenue. From 2025 onwards, to align with how we run the business internally and how customers are shopping, all sales from both bespoke and lifestyle ranges will be in our design and installation segment. our solar installation business will continue to be included in design and installation. The table on the right shows the 2024 revenue in both the old and new methodologies, with approximately 80 million of sales moving from retail to design and installation. Now, when you look at this table, you might think that the year-on-year movements look a little bit funny because the switch to the new methodology changes the year-on-year percentage movement for D&I, but not for retail. Now, this is because the 80 million of sales that moves across has a low positive year-on-year growth rate, similar to the rest of retail. So when it's taken out, it doesn't change the growth rate of what's left. But when, of course, it moves into design and installation, which have been in decline, it does affect that number. Got that? Okay. Happy to take questions on that offline. So I'll end with some comments on outlook and guidance. So far in Q1, trading has been encouraging. Retail sales remain in year-on-year growth. And in design and installation, the momentum from Q4 has continued, with year-on-year growth in ordered sales in the first 11 weeks. Due to the lag effect, delivered sales will remain negative in Q1. Now there's some technical guidance provided on the slide there for you, I won't read those out. So to summarise, as we end 2024 and look forward into 2025, the business continues to deliver well in what continues to be a tough trading environment. Retail continues to perform well and we've seen a marked improvement in design and installation. Good cost management has minimised the drop in profit year on year for 2024 and will stand us in good stead to grow profit as the wider economic environment improves. This will enable us to continue delivering strong cash generation and good returns to shareholders. With that, I'll hand back to David.

Thank you, Mark. Look, as I share with you in every results presentation, our growth lever house depicts Wix's clear, distinctive and consistent strategy with seven areas of focus to drive growth and market outperformance. Over the next couple of slides, I'll demonstrate the extent to which the levers are working and where we see plenty of headroom for further growth. But before I do that, let me touch on some customer trends that we're seeing across the UK home improvement market. As we enter 2025, we are not seeing any dramatic change in terms of consumer attitude and behaviour. Likewise, the broad market trends remain in line with my last update in September at the half year. I said then that overall market trends were heading in the right direction, albeit the external environment remains uncertain. Trade pipelines remain very healthy and is it any wonder as we have the oldest housing stock in Europe demanding a constant need for repair and maintenance. Over 50% of the tradespeople that we survey in our monthly Mood of the Nation research tell us that they have a pipeline of work over three months and one in four have a pipeline over 12 months and these pipelines remain stable. They also tell us they are doing research to ensure best value and our market leading price combined with our guaranteed 10% TradePro discount is perfectly suited to this customer behaviour. The market for new kitchens and bathrooms remains below historical norms. However, it has stabilised in recent months and there is no longer a decline in people planning to spend on a new kitchen or bathroom. And we continue to see stronger demand in the more value end of the kitchens market, which we target through our Wix lifestyle range. Turning to the wider home improvement market in the DIY sector, the story of consolidation that really started in 23 has continued, most recently with Homebase following Carpetright and Wilco into administration. DIYers remain focused on smaller projects such as decorating and garden maintenance. They're spending a little bit less but still demonstrating a strong desire to improve their homes. So these are some of the customer trends that are playing out in the overall home improvement market. However, let's not forget that the UK home improvement market is large. And within it, we believe the Wix differentiated business model is well placed to continue to grow and take market share. I'll now take you through some of the key initiatives that we're undertaking to win in this market. TradePro is the engine room of our retail business, with sales up 14% in the year. As a reminder, these are our most strategically valuable customers, spending on average 10 times more in a year than a typical DIY customer. As explained at our TradePro Capital Markets event last year, we have evolved our focus from total members, which is now well beyond the million mark, to active members, and we now have over 550,000 active members. We continue to expand in the B2B space and have now had partnerships with trade federations such as Checker Trade and Safe Contractor, giving us access to new sources of accredited tradespeople. In DIY, our strategic focus is on building new and innovative ranges in core categories, and we're making great strides in this, introducing products that customers love. We've purposely focused on expanding our ranges in those smaller project categories that we know DIYers are doing. Categories like garden maintenance, painting, decorating, shelving, storage. Quite an accelerating trend has been acoustic wall panelling. It's proving extremely popular since we launched it during last year. We continue to invest in our digital capabilities to deliver an integrated multi-channel shopping experience for our customers, which is driving online conversion. We've moved at pace to improve our offering on digital payment options. Earlier in the year, we rolled out Google Pay functionality for digital payments to complement our existing Apple Pay offer. And following a successful launch of Klarna in 2023, we've now launched ClearPay in August 2024 as a second buy now, pay later option. We use our proprietary and market leading AI machine learning model, the missions motivation engine, to deliver tailored personalized value and content to customers to help them complete their home improvement missions. And this is driving significant revenues and building customer loyalty and lifetime value. The overall success of these initiatives can be seen in WIC's accelerating market share, seen here in the top right chart. This has been driven by both strong growth in TRAPO and gains in the all-important DIY decor and garden categories. We continue to broaden the reach of the Wix brand through products, service and communications that appeal to a younger and female DIY base. A good example of a product success is the launch of Kimberly Walsh's Wix own brand paint colours, where her new subtle sage quickly became a top selling own brand colour. And as a result of this intentional drive to shift our customer base, Wimming now account for one in three of our customers from one in six just five years ago. Our retail market share and volume growth drive buying benefits and improve the efficiency and productivity of both our stock and working capital. We can then leverage these benefits to strengthen our value proposition, maintain our market leading price position and keep customers happy. A simple virtuous circle. The impact of all of these things showing through in our customer satisfaction metrics. We are delivering record levels of customer satisfaction in particular in click and collect and home delivery where customers have the highest service expectations and all of this driving an excellent rating on Trustpilot. I'll now turn to our design and installations business. In a challenging market, we are very pleased with the progress in overall performance. As I said before, the improvement has been driven by the enhancements we have made to the business rather than any uptick in the market. Mark has already touched on our one kitchen approach. In response to customer feedback, we have simplified the customer journey and now present a unified Wix kitchen offering rather than segregating bespoke and lifestyle paths. This new unified approach encompasses all marketing assets, brochures, the website, advertising and promotions. We have further simplified the start of the customer journey by developing new tech that puts the customer in control of that all-important first design consultant meeting. Customers can now book either online or in-store directly into an individual design consultant's diary by store nationwide, finding a time that truly suits them to start the imagining of a new kitchen or bathroom. Sort of think open table for design consultants. In addition, we've added 160 new design consultants and now have 735 across all stores, all increasing customer availability. And our field service management tool provides a technical solution for scheduling installers to make the overall experience as seamless as possible. With our customer experience center ensuring that each customer has their own project manager to help them through the multi-stage design and installation process. Of course, we continue to innovate in this space, bringing new furniture, colourways and appliances to our ranges to ensure we remain on trend and are offering customers the very latest in kitchen and bathroom design. And this is landing really well with customers and we're seeing strong growth from all of the new products launched in 24. The recent newcomer to our design installations business is solar. Wix solar is now displayed in all of our stores and we are seeing above average conversion on leads when they come via our stores or the Wix website. This combination of self-help actions has driven improved momentum both in delivered and ordered sales. In the first half of 2024, delivered sales were minus 18.3, which then improved to minus 8.4 in the second half. And in the final quarter, we saw ordered sales, a lead indicator of future delivered revenue, move into positive growth. And this remains the trend. And we have plenty more self-help actions in our toolbox with a strong pipeline of innovation and further investment in technology to maintain momentum. Now, I hope that many of you have already seen our new design and installation TV ad campaign, which hones in on our purpose to simply help the nation feel as proud. But for those of you that have not seen it, I'm going to run the VT now.