The DIY industry, alongside the general market, has faced several economic headwinds over the last two years, impacting retailers and homeowners. Record inflation levels caused consumers to cut back on non-essential spending and save on higher-priced goods.

UK inflation now sits at 6.8%, down from highs of 11.1% in October 2022. However, interest rates remain at highs of 5.25% and are unlikely to come down for quite some time. Therefore, homeowners are choosing to invest in their own homes as mortgage rates remain elevated and the cost of moving becomes unaffordable.

As a result, several DIY retailers are well-positioned to benefit. Here are two London-listed stocks that could capitalise on the opportunity:

Wickes

Wickes is a major player in the DIY market, with over 250 stores across the UK. The retailer bounced back from a slow start to the financial year, as its core division was able to recover following an inconsistent performance in its prior quarters.

Wickes’s total LFL sales grew 3.0% in Q2, with core LFL sales up 2.3% as customers choose to invest in DIY projects and trade continues to perform well. The weaker housing market is causing consumers to look for new ways to refresh their homes while moving becomes an issue.

Wickes’s click-and-collect service will also be vital in the long run as this becomes more popular. Sales via this channel rose 5.6% in Q2, with Wickes recently cutting its fulfillment time to just 30 minutes. This will remain essential as rivals such as Screwfix recently promoted its 60-minute or less Sprint click & collect campaign.

Screwfix

Screwfix’s parent company, Kingfisher, currently sits second in the top 5 most shorted stocks, but recent growth plans suggest strong potential over the long term.

Kingfisher reported its UK & Ireland sales grew 1.3% to £1.6bn in its Q1 results to April 30. But much of its growth was driven by an exceptional performance from Screwfix, which saw sales grow 6.5%. This growth was driven by strong demand from trade, its strong online offer, and its expansion plans as it aims to open 60 new stores this financial year.

Screwfix has also recently acquired Connect Distribution Services from administration. Connect Distribution Services sells DIY and trade parts online through its websites eSpares, 4OurHouse, and BuySpares. Screwfix continues to expand its proposition both online and in-store.

Improve rather than move?

Consumers are picking up DIY projects to help save on costs and refresh their homes. The cost of moving is becoming too expensive for households, with higher mortgage rates and house prices making it impossible for many.

However, this is creating an opportunity for people to invest in their own homes and prepare for when the housing market improves over the coming years. DIY retailers such as Screwfix and Wickes are set to benefit from this. Wickes reported its interim results on Tuesday, September 12, whilst Kingfisher reports its half-year results on September 19.

By Jamel Bougheda