Wickes Group PLC

LSE:WIX

Earnings Call Transcript

[David Wood, executive]

Good morning, and thank you for taking the time to join us today. And I'd also like to welcome everyone who is watching via the webcast. I'm here with our CFO, Mark George, and we're delighted to share with you our first half results for 2025.

We'll spend the next 20 minutes or so taking you through the performance of the business, broader market trends and highlighting the great progress we are making on executing our strategic plans. I'm pleased to report that both our retail and our Design & Installation business has had a strong first half. Our retail business has continued its volume-led sales recovery trajectory, resulting in record market share. And the self-help actions we took last year and earlier this year to transform our Design & Installation business, are resulting in increased project volumes, a return to like-for-like sales growth and driving market outperformance. This sales growth plus our productivity plans are driving operational leverage, a 5.6% increase in group revenue, combined with our productivity savings, which has helped to offset inflation has resulted in a 17% increase in adjusted profit before tax of GBP 27.3 million.

We continue to pursue growth through targeted investments. When it comes to our store estate in the first half, we opened 1 of the 5 to 7 new stores planned for the year and refitted a further 4 stores with more refits to come in the second half. And this year, we have stepped up our investment in tech to underpin and advance our growth and productivity plans. And Mark and I will share more on this later. And of course, we continue to invest in product innovation with new ranges in retail and some great stylish kitchen and bathroom ranges that are proving very popular with customers.

We are delivering attractive returns to shareholders and have announced today an interim dividend of 3.6p, whilst the GBP 20 million share buyback that we announced in March is ongoing.

Before I hand over to Mark, I'm pleased to say that we remain comfortable with market expectations and our overall outlook for adjusted PBT remains unchanged. And finally, I'd like to take this opportunity to thank all of my colleagues for their incredible work in delivering these results and providing great customer service. I'll now hand over to Mark to take you through the numbers in a little more detail.

[Mark George, executive]

Thank you, David, and good morning, everyone. So as David mentioned, we've had a strong first half with good growth in sales and profits. On this page, we have some of the headlines. So revenue for the half was GBP 848 million, up 5.6% versus H1 2024. Within that, retail was up 6.8%, and Design & Installation delivered sales up 2.1%. We've had strong profit flow-through with gross margin up 79 basis points and a 17% increase in PBT to GBP 27.3 million.

We continue to operate with a strong balance sheet, ending the half with GBP 158 million of cash. This performance and strong balance sheet have enabled us to continue delivering good returns to shareholders. As David mentioned, we're announcing this morning an interim dividend of 3.6p per share, and we continue to buy shares back in our GBP 20 million buyback program.

We'll break out more detail in the next few slides, but here, we have a summary of our P&L. As I mentioned, we grew sales in both retail and Design & Installation, in total, increasing revenue by GBP 45 million versus the first half last year. Gross margin rate increased by 79 basis points as a result of volume growth, category mix and lower consumer credit costs in our D&I business. Which, when combined with the sales growth, resulted in the pounds gross profit increasing 7.9% year-on-year.

Operating costs increased by 7%. A good productivity program enabled us to mitigate some but not all of the significant cost headwinds that are facing us, in particular, the increase in National Living Wage and National Insurance. More on this in a moment. Overall, this enabled us to deliver a 14% increase in operating profit and a 16.7% increase in adjusted PBT, demonstrating the healthy operational leverage of the business winning growth.

So let's look at the P&L drivers in more detail, starting with sales. In the retail side of the business, we continue to deliver really well most clearly demonstrated in our market share position, which continued to strengthen, and David will touch on this more a little later. Within retail, we saw good positive like-for-like growth driven by both TradePro and DIY. The number of active TradePro members increased to 615,000 and TradePro sales grew by 10%. DIY sales were in mid-single-digit growth.

As you can see from the table on the right, this growth in retail like-for-like has once again been driven by volume with negligible inflation in the business. In Design & Installation, our sales performance has continued to improve. The order book has been growing consistently since Q4 2024. And with the usual time lag, we are now delivering that revenue with Q2 being the first quarter of delivered sales growth since Q2 2023. For the first half as a whole, like-for-like growth in Design & Installation was minus 1% with total revenue growing 2.1%, supported by new store openings and Solar Fast, which only went like-for-like in June.

The profit bridge on this slide helps highlight the key drivers of the 17% growth in PBT. The strong performance in retail margin came from an increase in both sales and margin rate. In Design & Installation, the progression into delivered sales growth in Q2 meant there was a small increase in gross profit in the half. And clearly, the trend for D&I is positive and encouraging for the rest of the year. On costs, we've shown here the impact that the strong volume growth has had on our cost base with around GBP 7 million of volume-related costs. We can then see the impact of inflation, GBP 8.7 million in the half, which is quite a bit higher than on the same chart last year, which showed about GBP 5.5 million of inflation in the first half, reflecting the increasing pressures of National Living Wage and National Insurance coming in the business.

Our productivity program delivered GBP 5.5 million of savings, slightly higher than H1 last year, which is encouraging, but clearly, as the chart shows, not enough to completely offset the cost inflation. We continue to invest in our business and investment initiatives that hit the P&L resulted in GBP 5.4 million of incremental costs year-on-year. In addition to costs relating to new stores and refits, we've also increased the investment in technology. This IT investment is set to increase further in the second half, and David will talk more about this in a moment.

Turning to cash. We are a strongly cash-generative business. And even in a challenging economic environment, we can generate cash to reinvest in the business, pay a healthy dividend and buy back shares. We ended the half with GBP 158 million of cash. Now as you'll recall, we have seasonality in our working capital cycle in which we have a significant improvement in working capital in the first half of the year, which then unwinds in the second half. Now the working capital position will normalize in the second half of this year in the usual way, but it will leave us with an average cash position across the year well ahead of our December low point. The strong cash flow from our growing profit and our healthy balance sheet gives us flexibility to invest further in growth initiatives as well as to accelerate the returns to shareholders.

On growth, our CapEx plan, which is predominantly invested in new stores and refits, was GBP 9.5 million in the first half and will be between GBP 30 million and GBP 35 million for the year as a whole, with the program clearly back weighted to the second half. In H1, we returned GBP 25 million to shareholders in the form of dividends and buybacks and we also spent GBP 11.9 million buying shares for our employee share scheme. So overall, a very healthy cash position.

I'll end with some comments on outlook and guidance. So far in Q3, trading has been in line with our expectations with all three parts of the business, TradePro, DIY and Design & Installation remaining in growth. We expect costs to increase in the second half with the full effect of the increase in National Living Wage and National Insurance, which only came in, in April, plus the back-end weighting of our new store opening program. We'll also be stepping up our investment in technology. For the year as a whole, we'll be spending around GBP 10 million more on SaaS projects with the cost going through the P&L than we did in 2024.

Despite these increases in operating costs, our strong trading performance means that we remain comfortable with consensus expectations for PBT for the year. Now there's also some technical guidance provided on the slide there. I won't read it out, but it remains unchanged from what we gave at the beginning of the year. So to summarize our position at the half year point, the business continues to deliver really well with all three parts of the business delivering good sales growth. Despite significant cost inflation, we're delivering good operational leverage from that strong sales performance with PBT growing significantly faster than sales. And this is enabling us to continue investing in the business and at the same time, deliver good returns to shareholders. With that, I'll hand back to David.

[David Wood, executive]

Thank you, Mark. Now of course, it wouldn't be a Wickes presentation if I didn't share with you this slide, our growth lever framework. Our sustained market outperformance is a clear demonstration that our uniquely balanced business model and strategic growth levers continue to deliver results and achieve our very simple purpose, which is to help the nation feel house proud. I'll take a few minutes to share how we are investing in these growth levers to continue to win in this market. But before I do that, I thought it would be helpful to look at some of the current consumer trends we are witnessing as we put our strategy into action.

As you are aware, we keep a close eye on trends for our monthly Mood of the Nation survey. Our local trade customers tell us they continue to be busy with healthy pipelines of work and 1 in 4 of them telling us that they're booked up for a year in advance. For customers in the market for a new kitchen or bathroom, we are seeing that planned spend remains stable, although still below historical norms. It's worth noting that as people have been holding off buying a new kitchen or bathroom, they are getting older and simply more worn. So inevitably, there is a backlog of volume building up.

And turning to DIY. People still want to improve their homes and continue to prioritize DIY projects in the home and garden. And as ever, speed and convenience is important to them. In our most recent survey, 60% of them saying faster deliveries and that they are happy to pay for more for the same-day service.

We are particularly pleased that sales growth is volume led, and this is all down to more customers coming through our doors or shopping online. In our retail business, the TradePro engine is truly motoring ahead with sales up 10% and active membership, as Mark said, growing to 615,000. We are driving up DIY customer numbers through purposely broadening our appeal, attracting new customers by innovating in strategic categories and engaging communications. Our Proud as a Peacock advertising campaign is working very well for us. And in case you haven't seen it yet, here's one of our latest TV ads.

[Presentation]

[David Wood, executive]

Now we know that customers value choice, convenience and speed and with our digitally led service-enabled business model, it allows us to provide all of this quite seamlessly. We are achieving incredibly strong customer satisfaction scores, particularly in Click & Collect and home delivery, arguably, those service touch points where the customer judges us most critically. We are continuously innovating in this space. In the first half, we are seeing further -- we have further enhanced our proposition to offer customers greater choice and even faster, more convenient service through a number of new initiatives. We have repositioned our assisted selling offer under the new name, Wickes Extra, which offers customers who are shopping in-store easy access to our extended range online. We've launched a new 15-minute Click & Collect service, halving the time they can now order online and pick up from their nearby store. As we pick it quicker, customers are collecting it quicker, so we know they value it and it works.

And I'm delighted to share with you an exciting industry-leading service that we're launching called Wickes Rapid. In a nutshell, it means that customers will be able to receive a same-day home delivery of products weighing up to 800 kilos in under 3 hours. No one in the market is offering this. With a specialist partner on board, we can now deliver to your door or site within 3 hours, 7 days a week. There are over 10,000 SKUs available and a delivery cost from just GBP 9. As you can imagine, for a local trader, this is a game changer, giving them the ability to make bulk orders at speed so they can just get the job done. We've launched this in the last 2 weeks following a very successful customer trial.

The result of all of the above, a clear strategy of proven growth levers executed brilliantly is delivering record levels of market share. As you can see from this chart, particularly impressive growth in the past year as more customers choose to shop with Wickes.

Now turning now to our Design & Installation side of the business. We are very pleased that the transformational actions we took as we exited last year and into this are bearing real fruit, and translating into growth in ordered and delivered sales. A quick reminder of what those actions were. In response to customer feedback, we simplified the customer journey and now present a unified Wickes Kitchens offering with our bespoke and lifestyle ranges presented together across all marketing assets, brochures, the website, advertising and promotions. We also 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 consultants diary by store nationwide, and we've increased the availability of our design consultants, making it easier for customers to find a time that truly suits them to start the imagining of a new kitchen or bathroom. Think open table for design consultants. Our field service management tool provides a technical solution for scheduling installers to make the overall experience as seamless as possible.

We've launched a number of strategic initiatives for '25 and are innovating across all levels of spend and choice. At the more value-led end, we've added 8 new colorways to our lifestyle kitchens, whilst at the higher end, we'll be launching paint to order in October and have introduced branded kitchen appliances like Smeg. And all of this will be available to customers via a fabulous new design software program that we'll be rolling out in the second half and will transform the way a customer can visualize and design their dream kitchen and bathroom.

And in our solar business, leads now generated through Wickes channels account for more than 80% of the total Wickes solar installations.

I thought I'd take this opportunity just to show you how great our kitchens and bathrooms look. It's all about innovating with color and style and here are a couple of great examples. From the more traditional style bathroom on the left to our more contemporary styles, which reflect customer preference for pastel colors. And that trend for pastel colors is also reflected in our kitchen designs, as you can see here with the lifestyle kitchen in pink. You'll be able to see these and more kitchen and bathrooms and hear all about our exciting plans for our design installations business at our Capital Markets event on the 14th of October in our Staines store. So get that in the diary.

Now given the vital role that tech plays to underpin the initiatives I've spoken about so far, I wanted to highlight some of the key investments we are making, along with the benefits they bring. So back in 2021, when we demerged the business, we said we're going to put increasing investment into our tech platforms and services. We knew we had to address the legacy systems that needed upgrading, and we also had a clear vision to improve the customer experience through tech and digital advancements. In line with our plan, we are increasing our investment in this area and building a compelling track record of both enhancing the customer experience and improving productivity and efficiency through our tech investment.

I've already talked about the ongoing drivers of growth listed here on this slide, so I don't propose to go over these again, but I will tell you about some of the strategic tech initiatives coming down the track in the coming months and years. The new design software tool will be a game changer for our D&I customers when we launch it for the winter sale. It will transform the customer journey by unlocking new capabilities to provide seamless inspiration and design experience and it will also deliver cost saving benefits, helping reduce any potential errors that can sometimes occur between measurement and installation.

In the second half of 2026, we will roll out our new TILL systems and store inventory management into a unified commerce platform, thereby giving customers a more seamless shopping experience and our store teams the ability to truly digitize the store operation. And last but not least, we'll be implementing a new order management system to simplify our ordering and fulfillment capabilities and improve customer order accuracy. That's going to happen in two phases, the first taking place in the first half of '26, followed up by the second in 2027. So as you can see, there is a solid plan of investment and activity going into advancing our technological capabilities this year.

Turning now to investment in our store estate. In the first half, we have refitted or refreshed 4 stores and now 82% of the estate is in the new format. We opened 1 new store at Leeds Moor Allerton, a former Homebase store, and since the period end, we've opened new stores in further 2 Homebase locations, Bury St Edmunds and Dunfermline in Scotland. Our property plans for the second half are on track with a total of 10 to 15 refits and 5 to 7 new stores for the year, which does include those 4 Homebase stores. And to give you an idea of what an ex Homebase store transformed into a brand-new Wickes store looks like, here's a short video.

[Presentation]

[David Wood, executive]

Now as you will know, our Built to Last responsible business strategy is incredibly important to us and embedded deeply within our business. In the first half, we had a number of highlights, including being ranked as the U.K.'s #1 retailer in the Financial Times Europe's Best Employers survey. Our community program continues to support local charities and community groups up and down the country with over 1,200 projects benefiting from free Wickes products and volunteer support already this year. We have a new charity partner, CALM, which is a suicide prevention charity, and we're committed to raising GBP 2 million to them over the next 2 years. We're already well on our way to hitting that target.

And in our homes pillar, which is focused on helping customers use less energy and reduce their carbon footprint, we have now trained 100 of our design consultants to be able to offer Wickes Solar in store and in the home. This is proving popular in a market where customers particularly value face-to-face advice, and it's a unique differentiator for us as no other national retailer or solar installation business is offering this service.

So to conclude, we've had a strong first half, growing sales, profits and delivering record market share in what continues to be a challenging market, really demonstrating the customer appeal and distinctiveness of our business model. And whilst we are at record levels of market share, there is still so much more to go for. We are still just 6% of the GBP 27 billion U.K. home improvement market. So we see tremendous headroom for growth. And that's not including the potential opportunity in the emerging and fast-growing home energy solutions market.

Our strong cash flow means we're able to invest in our proven growth levers to deliver further growth and market outperformance, and most critically to continue to deliver attractive returns to shareholders through our dividend and share buyback program. Thank you for listening. Mark and I are now very happy to take any questions you have.

[Kate Calvert, analyst]

Kate Calvert from Investec. Two for me. First on Design & Installation. What have you seen in terms of leads over the last couple of months? So is there any change in sort of conversion from the design consultation to ordering? And then the second question is on the step-up in IT of GBP 10 million through the P&L. Should we expect any other sort of step-ups going forward? Or is that now sort of in the base?

[David Wood, executive]

Yes. Kate, in response to the Design & Installation question, as I sort of like touched on there, I mean, some of the benefits of the investment in tech, particularly giving the customer the ability on their terms to access the design consultant really swiftly and seamlessly is really helping continue to grow leads. So we are still seeing leads in growth in our business. And as those leads come into the journey, likewise, we're seeing conversion in growth as well. So the underpin for our Design & Installation business is we are growing this business through volume, which is great to see. And the volume is there because we've got more customers coming in and we're converting more of them.

[Mark George, executive]

Yes. And on IT, just taking us back to where we were a couple of years ago when we did our capital allocation update, and we talked about the IT and the move to SaaS accounting and everything, we did talk at that point about increasing our overall spend on CapEx and SaaS and IT from around GBP 15 million a year to GBP 25 million a year. And we're close to that level now. Most of that is coming through in SaaS and therefore, hitting the P&L. There will be another increase next year, probably low single-digit millions next year, and then it will feel like we're at the sort of run rate. But what this isn't a, is a spike in investment that then is going to go down again. This is about getting to the right level of investment that we need for a business of our size that is digitally led. And as we've seen, a lot of the initiatives that we've been investing in are at the heart of what some of our success has been, and we see that as the future as well. .

[Shane Carberry, analyst]

Shane Carberry from Goodbody. Just two from me. Just to follow up on that Design & Installation question. Can you give us a bit of a sense of -- you've moved into the kind of lower-priced kitchen market as well. Just how much has that got to do with the pretty encouraging like-for-likes in Q2 on Design & Installation? And then secondly, if you could just give us an update now on kind of Solar Fast, how the integration has gone and kind of just over a year on how you think it's performing versus expectations?

[David Wood, executive]

I'll do the first, you do the second. So as I just touched on that, Shane, in the presentation, we're continuing to innovate across the offer in terms of Design & Installation in good, better and best, but lifestyle and bespoke being how we sort of like cluster those. Lifestyle is in growth, which is great to see. But interestingly, it's a faster-growing bespoke business that is really helping drive the performance of our overall Design & Installation business. So we're delighted to see that, that the bigger ticket and the higher average order value projects are in greater volume growth.

[Mark George, executive]

Yes. And on solar, very pleased with the progress on solar. When we bought the business, it was -- what attracted to us was the very strong customer focused operational execution of doing brilliant projects and looking after customers really well. From a sales perspective, they relied on a lot of third-party dealers and salespeople to bring in their sales. What we have been doing is building on the great operational execution, but then adding Wickes as the key sales channel, which is going to be much stronger for us and much more differentiated in the long term. So what we have not seen is a growth in total sales. What we're seeing is a switch away from the sales that were generated in third parties now to Wickes being the real engine. And as David mentioned, we've trained hundred of our design consultants to be able to sell. And this is a real differentiator because in the market, typically at the moment, it's either -- the journey is very digital. You may speak to somebody on the phone. The opportunity to go in and talk to someone in person, either in the store or indeed have the design consultant come to your home and talk to you about solar is a real differentiator for us. And that's only just happened. So we're expecting that to really build over the coming months.

[David Wood, executive]

Yes. I think it's fair to say we're organized in a proposition that will compete for the future. So it's not about the last 5 months. It's about building a business of scale for 5 years out is how we think about this.

[David Hughes, analyst]

David Hughes from Shore Capital. A couple from me, please. Firstly, in terms of categories, you talked about kind of expanding into or building in categories where you perhaps underserved. Are there any key ones that you're looking at where you think there's a big opportunity to grow Wickes' share? And then secondly, on the store rollout program, not necessarily a specific number, but do you have kind of a rough idea of how much more white space there is for you? How much more kind of store rollout you think you can get after before you feel like you're at the right level of Wickes penetration?

[David Wood, executive]

Yes. So I'll take both of those, Mark. If I start with your last question and work back to categories. So in terms of the property opportunity, I mean, we've always said, look, we're around about 230-odd stores at the moment. We can see a pathway to somewhere between 250 and 260 in terms of network build with the broad cadence of sort of like at the moment of around about 4 to 5 a year. But they will be in much larger towns or conurbations where we feel we're underrepresented where we can build more of a network in those larger populous areas. That isn't to say in time, though, that there isn't more opportunity for the business as we get beyond that. So I think our Phase I thinking, David, at the moment is let's have a marker in around that 250, 260. And as we move through, there may be more opportunity. But we're definitely underrepresented in the U.K. We have national coverage, but there's ample white space for our business. I think in the categories, it's really about some of the innovation we're putting into decorating. It's sort of the innovation in the product lines. We're putting into garden and so forth. I always cite and we're doing more of this as well, there are -- we're quite a generalist as a retailer. So we serve, particularly for our trade customer, our most strategically valuable customer, where we serve the general one man and a van. The opportunity for further category innovation is definitely having greater presence in the specialist area. How do we attract more specialist plumbers, more specialist electricians. So that's sort of like the glide path that we remain on. And we're doing some good stuff in that area, but there's definitely more to go. But really doubling down and innovating and appealing to a much broader audience, as you can see through the communication there, I mean we're growing our DIY audience really quite successfully at the moment, and that is coming through younger shoppers, female shoppers consistently in recent years, and we continue on that focus and strategy.

[Benjamin Yokyong-Zoega, analyst]

It's Ben from Deutsche Bank. I just wanted to ask about the gross margin drivers in the first half Out of that 80 bps uplift, can you talk about the uplift from the retail sales that you've had, but also the category mix and credit as well?

[Mark George, executive]

Yes. I'm not going to break 80 into exact numbers, but those are the three we mentioned. They all contributed part of that 80 bps increase. Just to explain a little bit more on the Design & Installation side, there were two of the elements, consumer credit, which is something we subsidize for our customers. The cost of that has come down for two reasons. One is interest rates are coming down. So if we're offering interest-free credit, clearly, that cost comes down to us a little bit. Plus we've tweaked our offer a little bit. On the category mix with of the sales growth we've had in design and installation has been stronger in kitchens than in bathrooms and kitchens tends to be slightly higher margin. And then on the retail side, it's really about volume-driven growth, and that gives us good momentum, the ability to really drive good deals with suppliers, get support from them because they really want to back the winners and the retailers that are giving them growth. So it's less about category mix on the retail side and more about volume benefits.

Matthew's got a question at the front here.

[Matthew McEachran, analyst]

Matthew McEachran from Singer. It's actually a follow-up on the gross margin point as well. I mean it's been a while since you recall such a decent sized margin uplift in the business. You've been through the moving parts. If we strip out the mix effect, do you think those levers, the other 2 levers are -- you've got further runway on that?

[Mark George, executive]

I think the year as a whole will be less of an increase than the 79 bps that we had in the first half, partly because we annualize some of the effects that we talked about. So this is not a sort of a change in strategy of trying to push up margin. The other thing that's really important to say is our price position remains very good. We don't have any inflation in the business. This is not a gross margin as a result of us increasing prices. Inflation has been 0-point-something either plus or minus every month of the year. And so this is about really trading volume hard, getting the best deals that we can, a little bit of category mix and the consumer credit. So please be reassured that the #1 priority for us is to be absolutely in the right place on price.

[Matthew McEachran, analyst]

Great. The second question, just on trade. I mean you gave a really good investor event, I think, probably about maybe a year ago, I can't remember the exact date. And there were quite a few levers in there in terms of targeting certain groups, increasing average spend, actually retaining or reactivating some lost trade customers. Do you want to talk -- within the 10%, do you want to talk a little bit more about which parts of that strategy are really yielding some benefits and whether or not you would see the momentum from some of those initiatives that you talked about as potentially increasing from here?

[David Wood, executive]

Yes. So all aspects of that are in play, Matthew, and all aspects are working to greater or lesser degrees just because of the size of the pools you're fitting sort of thing in terms of a pool of those that have lapsed versus those you need to reactivate. The primary driver, though, which is really important just to focus on, it is penetration of new customers, it is growth of new customers. So this business is underpinned by more people coming over the door into Wickes. As I always say, what we don't see in Wickes, we do track this, we don't see customers trading down within Wickes. We see customers trading in for the great value we provide. And the cornerstone of that in the first instance is more than half a century with trade is building the brilliant brand that is Wickes, it still needs 2/3 of our sales. So value and service and things like Rapid and 15-minute Click & Collect and all of that good stuff are just together, continuing to prove very sticky in terms of attracting customers to the business. But everything is in play without dissecting any further, I think. And the interesting thing, though, on AOV, what do we see is that at the moment, average order value, so the average basket for a trade customer remains quite stable. So penetration is critical to drive that volume growth, and that is where we're winning in this marketplace. They're still quite thoughtful and considered around the amount they're spending. As any one of us would be as we're shopping, whether we're shopping groceries or any other sort of like services, we're thoughtful and a bit more considered.

[Matthew McEachran, analyst]

Great. The final question, just in terms of current headlines in the press, the Employee Rights Bill is obviously getting a lot of attention at the moment. I mean you're a good employer.

[David Wood, executive]

We're the #1.

[Matthew McEachran, analyst]

Number 1 indeed. Well reminded. And I think from previous conversations we've had, you weren't expecting much in the way of incremental cost pressures as a result of the bill. But do you want to just -- can you just remind us exactly if that's the case? And why you think that's the case, that would be very helpful.

[Mark George, executive]

Yes. I think the main reason is because we are ahead of the curve on a lot of these things anyway, whether that's sort of flexible working or any of the other initiatives. I think we have always looked at what is the right thing to do for our colleagues. We measure colleague engagement frequently, and we really have a focus on it. And so actually, we're quite ahead on these things. So there was nothing really new in terms of bringing in either new initiatives or cost for us.

[David Wood, executive]

I think we are one of the few retailers nationally that offers flexible working for our store leadership teams. So you can work a 4-day week as a store manager.

[Samuel Cullen, analyst]

Sam Cullen from Peel Hunt. I've got a few also, a couple, I guess, reminders. On the kitchen ranges, can you remind us how many you offer, and the cadence of the refresh cycle, I mean you pointed out. You've refreshed the ranges this year. And then the second one on the kind of catch-up. The 1 in 4 of your trades is going to have an order book over 12 months, where would that have sat, say, in 2019, pre-COVID then during the peak, the trading boom during the immediately after COVID, is that a normalized level, 1 in 4 or is it 40% more normalized? .

[David Wood, executive]

Yes. I'll take both of those actually, Mark. So from a kitchen range point of view, as you know in our business, curation of offer is quite critical. So when we think about our broader retail business, I will get to the question, Sam, if you're not. It's around 9,000 SKUs versus a market that could be anywhere between 30,000, 40,000 SKUs in a physical location. So it's a highly curated range. We take the same approach with our kitchens and bathrooms business. So broadly, in our kitchens business, you're probably looking at around about 35 or so sort of like range options. I'm really excited, though, really excited is what sort of like paint to order can do to very flexibly expand that, by the way, because we can then offer you access to sort of so many more colors in a bespoke way. So that's just another way of providing almost extension of choice in a really simple, agile way out there in the marketplace. But it does follow our philosophy of curation. In terms of innovation, typically, in any 1 year within those ranges, you're probably changing 3 to 5. So again, in terms of range counts, it's probably going to be somewhere around 10%. The great thing is we get this right. And when you're going to make change in a business like ours and you're going to sort of rip out showrooms and replace them with new products, it needs to be right. And they always overperform in terms of their contribution to sales. So we're really thoughtful about the curation in the first instance. We're super thoughtful around the innovation as we bring it into the marketplace because we need to be disciplined with that investment in terms of making that change, and it works really well. So we get a multiple uplift in terms of the sort of like range change count to sales performance within the business. So innovation works well.

Now part of your question I simply can't answer on the Mood of the Nation monthly reporting because we didn't start it in 2019. It's something we started slightly later than that. But what I can say it does remain very stable. That 1 in 4 around 12 months for our TradePro customers remains pretty stable and it has done. It oscillates a little. It might be 27% of saying this, it might be 24% in but it tends to sort of like converge around about 1 in 4, and that's been stable for a number of years now.

[Mark George, executive]

And important to add to that, that we're not expecting that to go to 40, 50 because a lot of the trades people that we have as customers don't want long pipelines. They're operating on their own. They enjoy working 2, 3 months ahead. Some of them are what we call business builders are planning ahead. They're thinking about taking on new people on their team and they want to. And that's why we always quote the people with 3 months or more, and people with 12 months or more just different types of businesses.

[Samuel Cullen, analyst]

The last one was on market share. You're at 6% now. If you get to 250 stores, and I think you've talked about a goal of GBP 10 million revenue per store. Is that where we should be thinking on a 5, 7-year view getting sort of 10% of that market at the GBP 27 billion?

[David Wood, executive]

Gosh, I will have a view on that, but I'm going to be guided by my CFO because you're not going to happen next, Sam. I'm going to get very ambitious...

[Samuel Cullen, analyst]

You'll say 3, and he'll say so.

[David Wood, executive]

Would you like to take that one, Mark.

[Mark George, executive]

I think very happy to give a number. The date will be more for further discussion. But absolutely, we see the opportunity of GBP 2.5 billion across 250 stores. As David says, we're also looking at how do we expand beyond that 250, 260 stores. But we absolutely see the opportunity to do, on average, GBP 10 million a store. We have some stores, of course, sort of already doing that. The headroom for growth in each of trade DIY and Design & Installation is substantial. So it's very realistic to do that. The stores, of course, are the nucleus around where we base the sales, but a lot of the sales growth will be in online and the initiatives around faster Click & Collect, Rapid delivery, that's opening up new either actual customers or customer share of wallet. So those emergency purchases, if you're a trades person on site and you need it now, now we can do that with Rapid, whereas perhaps before they might have done something else. So I think the opportunities are there, the strategy is there. We've got the funds to invest in the tech that we need. And so the plans are pretty well laid out.

[Samuel Cullen, analyst]

And related to that, I guess, that's where you're going in terms of specialist categories that if you do go deeper into plumbing or electrical that won't be cannibalizing store space. It will be virtual online? I mean next day delivery or...

[David Wood, executive]

It's far easier as we do. When we're testing new categories, you put them into the Wickes Extra range in the first instance and to see what works. And then we will think about how we bring them into the physical estate thereafter. And that's exactly what we do. That's how we model it and work it. But I mean your start point that question is, look, this is a big market, GBP 27 billion, GBP 28 billion, where GBP 1.6 billion [indiscernible] share. There's just so much more headroom for growth in this market.

[Unknown Analyst]

Just a couple of technical ones and maybe a more general one. But on the working capital, obviously, there's a seasonal inflow in H1. But year-on-year, it's up quite nicely too. Is there any reason to believe that the year-on-year uplift will unwind in the second half? I mean the stock looks in a fairly good position. And then secondly, obviously, the headwinds get a little bit more intense in terms of the cost in the second half with inflation and the tech investment seems more H2 weighted. Productivity gains were obviously that a little bit below the inflation. But I guess the question is, what might you have up your sleeve sort of to meet this sort of second half profit. I think you've got to be flat in order to make the guidance, as you've suggested today or reiterated today. Just any sort of thoughts on those two points?

[Mark George, executive]

Yes, should I take both of those? Yes. So first of all, on working capital, I mean, part of the -- a big chunk of the year-on-year uplift in that normal seasonal swing is the growth in the order book in Design & Installation. And we will be getting through that and delivering quite a lot of that in the second half. So that will normalize at least most of it, if not all of it. And then the trading in terms of the stock position also as we get into more sort of normal levels of trading, I would expect the retail side of working capital to normalize. So I think it would be reasonable to expect that to normalize to a large degree. The cost headwinds coming in, in H2, they are stepping up our productivity plan will also add again. And if you think about that profit bridge for the half year, we just showed you what that might look like at the full year. I think that gap between the cost inflation bucket, which is a negative, obviously, and the mitigation through productivity will be similar in terms -- it will be bigger, of course, but it will be similar in proportion that we won't quite offset all of the cost inflation but we're doing a really good job on that. And then the strong sales growth is obviously -- we're able to capitalize on most of that growth and overcome most of the operating cost increases with productivity. So it's -- we're very happy with consensus despite all of that and also the increase in tech investment that we talked about. So we said that in the year '25, it will be about GBP 10 million more than in 2024. That will be slightly back half-weighted as well. So with all of those things considered, there's quite a lot to come on the cost side, but we're comfortable that the performance of the top line is going to be strong enough to carry it.

[Unknown Analyst]

If you're probably not going to do this, but if you could spell out, is there a minimum kind of top level growth you need in order to bridge that?

[Mark George, executive]

There probably is in your model. So you can back solve for that. But this is -- we're comfortable. We said that Q3 has started in line with our expectations. So we're comfortable with how we're trading at the moment. .

[David Wood, executive]

And the shape of that start in Q3 is what we've seen in the first half, which is this is volume driven. There's no inflation in this, it's volume driven, and we'll continue to benefit from the leverage of that.

[Unknown Analyst]

Okay. And then finally just a more general question. I mean that market share step up year-on-year looks obviously very impressive, and we kind of know the answer to it, but if you could just spell out where you think you're getting it and who's the full guys, and anything you can elaborate on that would be useful.

[David Wood, executive]

It's -- I mean the trend in terms of where it's coming from remains reasonably stable as we've discussed and answered this question before, which is broadly across all aspects of the market, whether it's through other retailers or the more trade-centric like merchant in operations, particularly when you think of our TradePro growth in particular. We don't over or under still from anyone. There's no over under trade in terms of how we're switching those customers. It's quite a simple [indiscernible] in the market. It is a question that we do ask because the benefit of bringing in so many to like 3,000 to 4,000 new TradePro customers every week, if you can talk to a decent sort of like slug of customers and work out if you're shopping with me now, where are you shopping less. That's a standard question that we ask. So we've got a good sort of insight on where that switching is coming from, but it's just across the market at large basically. And as I said, it's a large market always opportunity.

[Grace Gilberg, analyst]

Grace Gilberg from Jefferies. Just one question for me. It's around Click & Collect 15 minutes. Is that across all the stores in the estate now or is it...

[David Wood, executive]

It is indeed, Grace, yes. Yes. So our colleagues are working very hard. And as I said in my presentation, what's really interesting is you innovate on the things that the customers are seeking. So as we pick it quicker, the customers are actually picking it up even quicker as well. So there's a lovely correlation there. I mean, that's why we know that the proposition is of value. But the difference there is 15 minutes, we could be moving in some instances, tons of plasterboard in under 15 minutes and getting on to a back of a wagon. So it's not like we're picking small things up from remote -- a close location. We're having to move some big stuff to deliver on that promise. And we are delivering on spectacularly. Our colleagues do an amazing job, and the customer satisfaction and feedback has been brilliant as well. So we're delighted.

[Grace Gilberg, analyst]

Perfect. That answered my other question as well. Great.

[David Wood, executive]

Our customers like it. Was that your other question? Thank you, Grace.

[Unknown Executive]

Any more questions? Anything online team?

[Mark George, executive]

There are no webcast questions at the moment. I'll hand back for some closing remarks.

[David Wood, executive]

Super. Well, I'll finish where I started, it's with a thank you. Thank you for coming along today. I know it's been a little awkward to get into the City Day. So we really -- we greatly appreciate it. And also thank you for those listening on the webcast. Hopefully, you've got a sense this morning that we are really pleased with these results. It's been a super first half for the business. We remain very, very confident in our strategy that it will continue to deliver outperformance and growth for the business. I can't reemphasize enough that we are a 6 share player in a large market. We almost ignore what happens at a market level. If you innovate and provide the greatest value on the things that customers value most, you will grow your business, and that is where our strategy is centered and we will continue to grow this business. It is a great business. It's got tremendous potential. And Mike and I look forward to coming back and sharing further progress at the year-end. Thank you very much for listening.