Wickes Share Discussion Threads

[elongate] 22/10/2022 08:15

The transitional services agreement including IT between Wix and TP ends 2 years after demerger, but can be subject to a one off 6 month extension. Wickes pays TP for services, whilst getting it’s own new IT up and running.
A compelling reason to complete the transition to full independence.

[elongate] 21/10/2022 18:41

nickrl

We were actually speaking of the Wix dividend, and high yield against a low share price.

But forward looking, as you mention, there is a very important consideration everyone has failed to mention.

When looking forward, one should not stop at the well documented economic gloom, but look also at the company within it. Wix estimated at year end an additional about £30m investment was required to migrate IT away from Travis Perkins.
£12.1m was paid in the first half of this year, when at the same time as giving their years guidance, repeated today, the company advised it remained on track to complete separation of the IT infrastructure within two years of the demerger - ie before end April 2023. FY Capex within guidance this year was expected to be £40-£45m.
I cannot say that the balance of separation costs will necessarily fall within that sum, but IT separation cost is weighted to the second half and I would expect the company to get it’s IT squared away as a priority, and accordingly and optimistically there will be I shall say for argument up to £30m ‘extra’ in the kitty next year they don’t have to work for.

But I don’t want to argue over sums - shall we just say a lot more cash going spare?

[nickrl] 21/10/2022 16:30

@Elonggate the share price is looking forward though 6mths+ and things could be a lot less rosy than now although as i said above for me i see DFIM sales dropping back but some of the loss will be offset by increased DIY. What im not familiar with is respective margin on DFIM vs core DIY.

[elongate] 21/10/2022 16:17

As long as they have the cash to pay a dividend - they have - they will pay. Shareholders expect it, unless there is good reason to cut it. There is currently no such reason.
What you may be highlighting is that, in my opinion and that of some commentators, the share price has long been and very arguably is even more, despite the economic situation, way out of kilter with company performance, resulting in a fantastic yield by most people’s expectations.

[riverman77] 21/10/2022 15:44

The share price should have no impact on their ability to pay the dividend (at least not directly). Don't see why they would need to cut it just because yield has risen as a result of fall in the share price. Dividend appears to be well covered and they have plenty of cssh.

[creditcrunchies] 21/10/2022 15:28

I know, but the point being made is that retail in general has a lot of headwinds to deal with but this one is highly likely to survive. It's a case of accumulating on weakness where the dividend yield is going to start going over 10% they'll need to trim it if the share price is under the cosh for a long period. If the share price recovers quickly then it's not a problem. With the current political instability without any growth policies any time soon in fact they've said higher energy costs, higher rates and higher taxes. Look at it that way it's an issue.

[elongate] 21/10/2022 14:47

The dividend yield relates only to share price and will actually vary according to the price holders paid for the shares.
Wix currently intends to pay a dividend rate of 40% odjusted earnings after tax. Wix has a healthy free cash flow, and following today’s update reiterating the forecast and taking into account what was said in interims, no need will be foreseen to alter that this year, or to diminish expenditure on growth.

[creditcrunchies] 21/10/2022 13:06

Actually I was looking at the summary he goes right through their financials with a detailed report he doesn't own any WIX shares yet but he's added it to his watch list as a possible buy. Only concerns is the ability to finance dividends with a yield of almost 8%

[creditcrunchies] 21/10/2022 12:59

He does sometimes I'm not sure this is his type of business but he reviews a lot of companies every day. If it doesn't look right on the balance sheet he calls it out for sure. He's very meticulous with the accounts.

[essentialinvestor] 21/10/2022 12:52

Does Paul Scott disclose his current holdings?.

[nickrl] 21/10/2022 12:50

DIFM looks most exposed to consumer downturn which is coming maybe not off a cliff edge but month by month 100k homeowners need to re-mortgage and its costing them significantly increased monthly payments This will lead to house prices starting to slide back slowly unless govt meddles in the home mkt yet again to prop up house prices. So DFIM is going to see a drop off in workload but given a lot of it is outsourced it shouldn't hit the bottom line as much as a fall of in DIY will. For the latter people will be downtrading to doing more stuff themselves again so could benefit WIX.

[creditcrunchies] 21/10/2022 12:46

Paul Scott on his review today about the trading update said a good business with a strong ungeared balance sheet. Good value. Long term view looking good giving the business a thumbs up

[elongate] 21/10/2022 11:22

Wix management job is to steer the company through whatever prevails, in common with the rest.
Wix continues seeking growth, outperforming the market, and importantly, to continue increasing market share.

[darrin1471] 21/10/2022 10:55

careful. Had similar concerns regarding retail tracker funds. UK retail follows US retail which is fundamentally wrong as they currently have very different problems. This makes much of UK retail fundamentally very cheap.

Negative in WIX results is the DIFM order pipeline continues to fall and is now negative vs 2021

IMO relatively high mortgage rates are here for a few years and will lead to falling house prices. This can make refurbishments uneconomic and equity release less likely.
Also worth keeping an eye on the usd strength and bond yields as there may be more volatility leading to even higher fixed rate mortgages.

[kalai1] 21/10/2022 10:55

Wickes Group plc issued a trading Update for the 13 weeks to 1 October. The Group announced third quarter LFL sales growth of 2.6%, compared with the 0.8% reported for the first half. Management continue to expect full year adjusted PBT to be in the range of £72-82m, which would be double digit growth on the £65.4m reported in FY22. Performance is resilient so far given the slowing economy, but looking further ahead, uncertainties remain regarding consumer confidence and operating cost inflation. FY2023 energy costs could be c£7.5m higher than FY2022 if energy costs were to remain at the current price cap for businesses. So there will be more pressure on margins in the year ahead, with the top-line also in the firing as the UK economy slides into recession. Share price has halved over the past 12 months, valuation is attractive with forward PE ratio at 5.9x ranked 3rd out of 30 names in the Speciality Retailers sector. But the macro environment remains the main cloud, the housing sector is directly in the firing line of higher BoE interest rates and could be in for a tough couple of years. Too soon to buy but well worth monitoring for the longer run...

...from WealthOracle

hxxps://wealthoracle.co.uk/detailed-result-full/WIX/600

[careful] 21/10/2022 10:09

I am more interested in trading updates and results these days.
Market valuations are not related to value anymore.

Happy to hold here on a very low pe.
This company is not in any sort of trouble despite the share price collapse.

There is something technical going on that distorts prices.

A FTSE 250 tracker such as MIDD falls sharply because of disillusioned investors withdrawing their cash. This has been billions this year according to reports.

Underlying assets have to be sold to meet redemption.
Some Property funds are illiquid and refuse to pay investors their cash.
These created bombed out shares even when the underlying investment case is sound.

If we are desperate for cash as individuals we are only able to sell the good stuff such as gold, cars or valuable watches.

The junk gets left on the shelf.

[creditcrunchies] 21/10/2022 10:04

Naked wines reported a terrible update yesterday they went up about 25% they will struggle

[creditcrunchies] 21/10/2022 10:00

Positive trading update but the media reporting is just highlighting everything negative

[wad collector] 21/10/2022 09:51

It seems a feature of the market this year; even moderately positive updates are greeted with share price falls. Sit on hands time .

[careful] 21/10/2022 09:16

A severe reaction to a solid update.

Retail numbers today weaker may have contributed.

[elongate] 21/10/2022 07:48

Wix continues to expect to fall within guidance.
As such, the dividend will be as has been published within interims.

[bubloo] 21/10/2022 07:02

good update
dividend yield likely to be good