Wickes Group plc (WIX) Earnings Call Transcript & Summary

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 U.K.'s large home improvement market. 2024 has been a good year for Wickes, 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 sign posted on our last two trading updates, we are seeing an improved performance in our Design & 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 GBP 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 we'll be commencing a new GBP 20 million share buyback. We are a business that is committed to growing responsibly, and it was great to be recognized for all of the work we do as part of our Build to Last responsible business strategy with entry into the FTSE4Good 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 GBP 1.54 billion, down 1% versus 2023. Within that, Retail was up 1.9% and Design & 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 GBP 43.6 million. We continue to operate with a strong balance sheet, ending the year with GBP 86 million of cash. And across the year, we held an average of GBP 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 10.9p per share, and we completed the first GBP 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 & 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 energy -- sorry, 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 GBP 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 was another period of encouraging steady growth. In Design & Installation, our sales performance improved over the course of the year. The best guide to how we're trading at any point for Design & 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. Revenue is 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 & 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 increased 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 & 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 products 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 2 years. So it's driving P&L savings as well. So a real win-win, improved customer experience and lower customer 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 GBP 26 million 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 Solar Fast and to accelerate returns to shareholders. In 2024, we returned GBP 41 million to shareholders in the form of dividends and the completion of the first GBP 25 million of our share buyback program. We ended the year with GBP 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 GBP 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 program of accelerated shareholder returns. As a reminder of our capital allocation policy, we have four components to that. We aim to have at least GBP 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 1.5x to 2.5x, although we're paying above that at the moment. And any excess cash we will return to shareholders. We completed the first GBP 25 million buyback in September. And this morning, we announced a further GBP 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 & Installation revenue [Audio Gap] kitchen and 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 have 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 Wickes Kitchens. We've 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 & Installation segment. Our Solar installation business will continue to be included in Design & Installation. The table on the right shows the 2024 revenue in both the old and new methodologies with approximately GBP 80 million of sales moving from Retail to Design & Installation. Now when you look at this table, you might think that the year-on-year movements look a little bit funny, it's 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 GBP 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 & Installation, which have been in decline, it does affect that number. You got that. Okay. Happy to take questions on that offline. So I'll end with some comments on outlook and guidance. So, so far in Q1, trading has been encouraging. Retail sales remain in year-on-year growth. And in Design & 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 summarize, 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 & Installation. Good cost management has minimized 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.

I think you might have picked up one of my slides. There we go. Thank you. Teamwork, teamwork. I'll start by saying thank you to Mark. Thank you, Mark. Look, as I share with you in every results presentation, our growth lever house depicts Wickes' 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 are seeing across the U.K. home improvement market. As we enter 2025, we are not seeing any dramatic change in terms of consumer attitude and behavior. 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 and our monthly Mood of the Nation research tell us that they have a pipeline of work over 3 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 behavior. The market for new kitchens and bathrooms remains below historical norms. However, it has stabilized 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 Wickes 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 Wilko 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 U.K. home improvement market is large. And within it, we believe the Wickes 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 are 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 10x 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 1 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 have partnerships with trade federations such as Checkatrade and SafeContractor, giving us access to new sources of accredited trades people. 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 trade. It has been a -- trend has been acoustic wall paneling. It's proving extremely popular since we launched it during last year. We continue to invest in our digital capabilities to deliver an integrated multichannel 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 Mission 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 Wickes accelerating market share, seen here in the top right chart. This has been driven by both strong growth in TradePro and gains in the all-important DIY decor and garden categories. We continue to broaden the reach of the Wickes brand through product, 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 Wickes own brand paint colors, where her new Subtle Sage quickly became a top-selling own brand color. And as a result of this intentional drive to shift our customer base, women now account for one in three of our customers from one in six just 5 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 shine through in our customer satisfaction metrics. We are delivering record levels of customer satisfaction, in particular, in Click & 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 & 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 Wickes Kitchen offering rather than segregating Bespoke and Lifestyle path. 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 multistage design and installation process. Of course, we continue to innovate in this space, bringing new furniture, colorways 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. Wick 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 Wickes 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 moving to positive growth, and this remains the trend. And we are -- 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 & Installation TV ad campaign, which hones in on our purpose to simply help the nation feel house proud. But for those of you that have not seen it, I'm going to run the video now. [Presentation]

We are definitely feeling proud of Wickes this morning. That's for sure. Look, turning now to our exciting new store opening and refits program. In the last year, we refitted a further seven stores and now 80% of the estate is in the new format. We've also embarked on a lighter touch refresh program with more to come this year. Our new store opening program is performing well with four new energy-efficient stores opened in 2024 in Long Eaton, Durham, Aberdeen and Leamington Spa, creating around 120 new jobs. We have an exciting growth pipeline planned for the coming years as we target an overall estate of around 250 stores over the medium term. For 2025, this will encompass around 10 to 15 refits or refreshes and 5 to 7 new stores. The new store plan for 2025 includes four former Homebase stores. The great work we're doing as part of our Built to Last responsible business strategy has been recognized by the FTSE4Good, CDP and MSCI. And a few highlights for me will be the rollout of flexible working across the business, providing all store and support center colleagues with greater work-life balance. The supporting of over 2,100 community projects. And finally, the dramatic reduction of our Scope 1 and 2 emissions, keeping us well on track to deliver our SBTis. So to conclude, 2024 has been another year of good progress. The combination of our business model and growth levers has driven further market share growth despite the challenging environment. And pleasingly, we are starting to see performance improvement in our Design & Installations business. As Mark has outlined, 2025 has started with good trading. With the announcement of a new GBP 20 million share buyback, we continue to deliver attractive returns to shareholders in addition to the dividend. Confidence in our business model underpinned by our strong balance sheet drives us to continue investing in our proven growth levers, ensuring we are well placed for faster growth as the economy recovers. Thank you for listening. Mark and I would now be happy to answer any questions you have.

Kate Calvert from Investec. A couple for me. The first one is on the lighter touch refits. Can you give a bit more detail on how the economics have changed versus the original sort of refits? And the second question is on the store portfolio. You obviously closed, I think it was four or five in the current year. Are there still some stores that need to be resized left? Because you talked about, I think it was about 15 a couple of years ago that still needed resizing. And my final question is just on the gross margin. But obviously, the underlying gross margin has strengthened. What are your sort of thoughts on gross margin going into the current year?

Thanks, Kate. Do I tackle some of the first? You can underpin and then we'll go through. Gross margin is definitely yours. So in terms of refresh, as we've evolved the estate and now 80% of the estate is in the new format, some of the stores that are in that 80% were developed, sort of like, 5, 6 years ago. So there's an opportunity to go and just have a lighter touch in those stores just to get them up to the sharpest version of the new format. Now as we've learned across the course of those 5 years, particularly in the digital engagement around fulfillment, Click & Collect and home delivery. How I think about the economics, certainly in terms of the investment economics of a refresh versus a refit. So broadly, a refresh could be anywhere around the sort of like GBP 400,000 to GBP 500,000 mark to refresh a store. A refit typically will be in the range of sort of like GBP 1 million to GBP 1.3 million. And then a new store, I think probably GBP 1.5 million to GBP 2 million. That's sort of like the investment levels there. But we're going back and making sure that what we don't do over time is create another legacy problem with the condition of the overall estate. So we go back now with these lighter touches on some of those early stores to get them up to spec. Very quickly on larger stores, there are a handful in the network. We do have plans for most in terms of downsizing opportunity. That might be something that happens with one or two over the course of the next sort of like 12 to 18 months actually. So it's still there, but it's very at the edges of the focus of the property plan. Mark, I don't know if you want to sort of gross margin.

Yes. Just before that, just to add to the refresh economics, we would expect a similar level of return on capital. So we're spending less capital, as David said, so we'll have a smaller uplift in sales, but proportionately, it should deliver a similar kind of return. Gross margin, yes, as you noticed, 16 basis points up in '24. We always assume that the right plan is to be flat for the coming year. We're not a business where we're trying to increase our gross margin. The way we want to operate is that we want to be the sharpest on price. You know that we monitor that every week across our competitor base. We try to be 2% to 3% cheaper on a basket basis, maintain that point and really drive that flywheel of being good on price, driving volume. That helps us with the relationship with the suppliers, and we get the benefit in gross margin that way rather than trying to squeeze on price. So if you're looking to plan for the year, I think flat outlook on margin is the right way to do it.

Ben Hunt from Panmure Liberum. Just on TradePro, I think the general trend has been that AOV has sort of been a little bit lighter in the last year. People have been sort of perhaps being a little bit more frugal. Are you finding that perhaps as you're getting new customers through, some of them may be spending a little less than what they've used to when you first started getting them on board and really the sort of evolution of the existing customers and sort of seeing how their spending levels mature as they become more familiar with the concept.

Super question. Thank you, Ben. You're right. At the high level, what we're seeing is the growth in TradePro is absolutely driven by the growth in customer count, which is great to see, because any retailer just wants more customers coming over the door. Ben, they do still remain a little fifty. So when we look at the average order value, they've just been a bit more thoughtful about how much they spend. As I like to say, when they buy a stick of wood and battening in the old days, if they cut it in half, half are going to skip, half are going to job, now the other half goes in the back of the ban. They've just been a bit more thoughtful about their material costs. So they can be even sharper on price I think, for the customer. To the new customers that come on to the TradePro scheme, what's really encouraging is how quickly they adopt to what I would call the average levels of sort of like loyalty and spend and frequency. And that cycle is really about 8 to 12 weeks. So we see within 8 to 12 weeks that a new customer becomes more like the existing customers. And I think that's a really good and pretty pacey adoption curve actually. But the overall trends, growth in customers, a bit more thoughtful about the spend at this moment in time, but we're comfortable because the most important thing is they're in the family, they're part of the TradePro scheme. We can now talk to more personalized sort of like opportunity through the app, giving them personal value through our machine learning tool.

Okay. Great. And just a second question for Mark. Just in terms of the outlook, maybe if you could give us -- I don't know, any way you can elaborate on the inflation and the offsetting productivity, how you're seeing that sort of pan out? If you can give numbers, that would be great, but I understand it's early days.

Yes. So inflation, you mean cost inflation -- operating cost inflation rather than COGS, yes. So the main factor now in year-on-year inflation, as you would expect, is what's coming through in terms of wage increase. We're still feeling the effect of the 10% increase in National Living Wage that came through in April '24. We've now got another 7% coming in April '25 plus, of course, the increase in national insurance contribution. So there are headwinds coming. We now have that, of course, planned for. And we have a good productivity program. But of course, we had the good productivity program anyway. It's always on for us. It's a mindset that we look for those opportunities all of the time. We've got a good productivity plan coming in '25, and we're looking to build on that.

Do you think it's fair to say they were net out, as they have done traditionally?

So we haven't given specific guidance on that, but that would be a good expectation for us to aim for. But clearly, there's a lot of inflation. We haven't got the -- so much energy year-on-year inflation. We had that in '24. That's sort of flattening off now. So that's helpful. But obviously, we've got more coming through in terms of wage inflation. So we're going to have to pedal hard on the productivity.

Sorry, a couple of questions on CapEx and on Solar. On CapEx, is the increase basically just because there are more new stores and a few more refits, nothing else in there? There's a reference to the SaaS investment. Is that because it's treated as OpEx or it's under some other category like intangibles investments? I just wondered about that. And then finally, on Solar, I was myself getting some e-mails from you at the end of the last year on the product. How has that gone in absolute terms? How significant a number is it? And also, when you say better than average, what's a non-Wickes lead? I wasn't sure quite what the comparison was.

Do you want to take CapEx and SaaS, Mark?

Yes. So on CapEx. So the first thing, let's deal with the SaaS thing first. So the reason we've explained that is that investments that we make in new SaaS platforms are being put through the P&L now. So they're not in the CapEx number. So we're still making significant investments there. And we mentioned that because the CapEx number is smaller than it might have been a few years ago when the accounting treatment was a little bit different. So the increase in CapEx that's going to come in 2025 is partly a little bit more on the property side, but also a little bit more on the tech side as well. So we have a good program of initiatives to improve our digital platforms and back-office systems. That's stepping up a little bit in 2025. And that in combination with a little bit more on new stores and refits means that overall CapEx spend is going up.

Good stuff. And on the Solar, just talking to the conversion point, I mean, the thesis that really sat behind the acquisition of Solar Fast, outside of the clear market opportunity in very fast-growing addressable market was the fact that we believe our key point of difference is we are known and trusted national brand that has a history of Designing & Installing complex projects in the home. And really, what we're seeing is, if there's a lead comes through the existing business versus a lead that comes through the Wickes business, we are converting at a much higher level. So that's played out our thesis that there's a relationship and a trust with the homeowner that we can really capitalize on in a highly fragmented market where there are no brands that people really know and trust. And we're seeing that in the conversion. So early on, we see that's a really encouraging sign. Are you a warm lead, by the way, if we've been communicating to you, because I'm happy to pick up after the Q&A. Excellent.

So to give you some idea, about 25% of sales at the moment for Solar Fast, our subsidiary come from a Wickes Channel either generated in store from one of our colleagues talking to a customer or online or responding to an e-mail from Wickes. But Solar Fast has its own marketing channels as well.

It's Benjamin Yokyong-Zoega from Deutsche Bank. I had a couple of questions. Firstly, on price deflation. Are you seeing the period of deflation you saw last year ease into the start of 2025? And would you expect pricing to pick up across the market? And if so, would you expect Wickes to be leading or lagging the market on pricing? Secondly, on Trade, it's been a real pocket of strength last year. And I'm just wondering if you could share any insights on where that customer growth might be coming from, whether that's other retailers or builders merchants or perhaps more of a structural shift away from DIY?

Good. Thank you, Benjamin. Price deflation, as Mark sort of illustrated earlier on in his presentation, this has been a business that's been driven through volume across the course of '24. And we've had moderate deflation probably around the, sort of like, 2% mark. As we start this year, that is definitely coming back to a more of a flat position at this moment in time. It's hard to call looking forward, but I guess an assumption of maybe around 0 to 1.5, 2 maybe where things settle over time. But we remain a price leader in terms of value. Very clearly, it's a core part of our proposition. We are an EDLP business. The vast majority, sort of 80%, 85% plus of our business is our base business. It's a very strong price-led value model, and we will remain resolute and focused on delivering that for customers.

And then, TradePro. So yes, I think the -- when we talk about customers and their new customers, they talk to us about having shopped previously in lots of different places. And so, it's right across the board. It could be merchants. It could be some of the kiosk operators, some online-only operators. And it's probably worth saying that Trade's people normally have a repertoire of where they buy stuff from. It's not binary that they were shopping one place and then switch it all to another. So even the ones that do shop regularly with us will use others as well. And so it's a mix. What we're seeing is just shopping more with us. I think, there is an overall trend though of smaller trade -- individual traders like the ones that we see mainly moving away from the builders merchants, more towards an operator like Wickes, because they shop like a consumer. They're the decision maker. They're also the one that picks it up. They're very digital. They love shopping on the app, having Click & Collect within a few minutes and being able to pick it up and we put it into their van for them. All of that, we do brilliantly, and that's exactly what they want because they want to save time and save money. And you may have seen some of the merchants talking about losing the trade from that small independent trader, and that's absolutely who we focus on.

Matthew McEachran from Singer Capital Markets. Sorry about that. A quick question on Design & Installation. I'm just wondering if you could elaborate a little bit more on the kind of the shape of this growth coming through in the order book. I mean, you talked about positive growth, but are we talking marginally positive or low mid-single-digit growth? And then I wonder...

How many decimal points do you want to...

And the way you're constructing the range there -- it's really good. I'm going to let Mark answer this one. The fear of tripping up team.

Or maybe just give us a flavor. Are you seeing a lot more inquiries? Or is it really the funnel where you're getting the conversion rates up? Is awareness already kind of built that you've got the improved value lifestyle range out there?

You do the first, I'll do the second.

Yes. Okay. So in terms of -- we're not going to give any numbers at this stage. So what is really great is that it's the second consecutive quarter of order sales growth when we had between 18 and 24 months of negative. So -- that's great. Also I wanted to stress that we talked about the revenue segment and changing. Regardless of whether it's old money or new money, that part of the business is growing in both Q4 and Q1. And we'll give a more thorough update with our 16-week trading update, which will come in May. But I think just a continuation of a good positive trend, I'll say at this stage.

And I think the nature of the growth, very similar to TradePro, actually, it's customer growth. It's project growth. So we are serving more customers and more projects. The AOV is reasonably flat. But yes, it's customer growth and project count growth that is driving the performance of that business.

And you mentioned the process in terms of getting the installation through as having been made more efficient. I'm reading into that, it's probably quicker than it has been in the past? Or is that just dependent on the customer demands?

Well, it's -- we're able to align. So through our new field service management tool, which is an app that is connected between the stores, the DCs and the installers. And almost before a customer who has placed an order with us exits the store, we are able to align the installer, because the tech just deals with it. It can see into the dials of all the installers and it can allocate the job in a way that we previously didn't have that kind of technical platform. So the speed at which the customer can be introduced to their installer has improved dramatically. Because it can be down to hours as opposed to days or weeks. The overall capability of the business, though, is we can still between sort of like 8 and 12 weeks go from full design to full installation for a major project in the home.

Sam Cullen from Peel Hunt. I've got a couple as well, please. Just on market share, you've given the chart around your growth over the last 5 years or so. What do you think your share is at the moment in that Retail channel, out of interest? And then secondly, if we do see volumes pick up in the next 12, 18 months, is there any sort of restocking you guys need to do through the channel? Or are you pretty well stocked as you like?

Yes. So market share, a couple of ways of looking at it. Really big picture, the home improvement market in the U.K., we think is about GBP 27 billion. We do GBP 1.54 billion. So you can see sort of around 6% market share. That would include also the Design & Installation part of home improvement. When we define market share in the charts, that is the Retail side of the business where GFK create using sales data from retailers as inputs. We're not allowed to give the exact number of that. It's a little bit higher than the 6% for the overall market to give you some idea of how we sort of within that particular measure, but it is a robust, reliable measure using point-of-sale data from the retailers themselves.

Sorry, Sam, can you remind me of your second half of that question?

Any restocking needed if volumes do stock?

Yes, restocking. I mean, the good thing is Mark spoke to the AI-based sort of like forecasting and stock replenishment tool that we now have in the business, which is highly responsive. So we're moving the stock through the business really quite swiftly. As you know, one of the parts of sort of the economic model of our business is it's a highly curated range, where our top 150 lines alone will make up 35% plus of our sales every week. So it's a really efficient sort of like flywheel of how stock moves through the business. So as I like to say, it comes to the back door, goes to the shop floor and out the front door very quickly in an unrivaled way versus rest of the marketplace. So I don't anticipate need to lift the stock level.

If sales lift, stock turn would lift rather than stock. And we're not anticipating a broadening of the range or anything like that.

Okay. There are currently no questions on the conference call, but we do have a question online from Adam Tomlinson from Berenberg. On Design & Installation, can you please talk about the drivers of ordered sales growth? How much is help from prior comparatives? How much is any pickup in underlying consumer activity? And what is being driven by self-help? On latter, what self-help improvements have you made?

Do you want me to do that? I think, Adam, the primary driver here, as I said, is it's an increase in the volume of projects. So we have more customers coming to our business for the service is our Design & Installation business. That is because we have organized ourselves now. And the developments that we've done is hard to pull out any individual development that's driving this. We've completely reset the value chain. We've made it really easy through tech to customers frictionlessly access a DC. Previously, that wasn't the case. They can get into the journey quicker. We continue to innovate in the range, innovate in value, innovate in the promotional activity, innovate in the advertising in terms of driving that awareness, which leads us to have greater leads, greater customer count, greater volume and actually improving conversion. And then the back end of the whole of that journey, of course, we hand off through FSM, which is a new piece of tech, which is making it much easier to align the installer, and we hand them into the customer experience center, which is a unique proposition within the business. So I think it's a sharpening and a re-propositioning of a number of things that's just making the overall experience for the customer really sticky and in terms of appeal.

Great. There are no further questions on the webcast. I'll hand back to the room for closing remarks.

Super. Well, look, to conclude, 2024 has been another great year for the business. Retail, further growth in terms of retail sales, further market share outperformance. Our Design & Installation business now back into a more consistent path of growth, which we're delighted to see. That means we have delivered at the top end in terms of profits. We've delivered great returns to shareholders this year at GBP 41 million, and we've announced a new buyback. This is a confident business with a clear strategy, clear self-help growth levers with a balance sheet that we can invest and continue to drive that growth. We remain positive for the outlook for the year to go. Thank you very much for joining us this morning.