Nightmare is over for Wickes

Henry Sweetbaum, chairman of Wickes, must regret he ever heard of Hunter Timber and Builders Mate. The group had done very well at DIY retailing but its diversifications have proved a disaster, as yesterday's results showed.

The thumping pounds 258m loss in the year to December was due to the cost of selling or closing the unwanted businesses. The total costs ran to pounds 269m, which included a pounds 186m goodwill write-off from the original 1988 purchase of Hunter Timber. The loss on the sale and closures amounted to a higher than expected pounds 83m, as market conditions deteriorated as the sale process continued.

Fortunately for Wickes and its shareholders, the nightmare is now over. Hunter Timber has been passed on to a Finnish group and Builders Mate sold off piecemeal. Wickes is back to just DIY sheds again - exactly where it was in 1988. Significantly it is now the only pure DIY play in the retail sector, as the other groups such as B&Q and Homebase are part of larger groups.

Wickes' core DIY business is still the pick of the sector. In its 111 UK stores, like-for-like sales increased by 11 per cent and operating profits were up 9 over cent. This is in spite of a weak market which is now struggling against a harsh winter.

The company now has 153 branches in five countries and is expanding in South Africa, where it has three stores with another four planned for this year. However, there were difficulties on the Continent, where Wickes has struggled against poor weather, weak economies and management upheaval.

That Wickes shares only dipped 4p to 121p yesterday shows that the City was already braced for bad news. The house broker, SBC Warburg, is forecasting profits of pounds 40.5m for the current year, which puts the shares on a forward rating of 16. A rerating is likely to take time and, given the fragility of the housing market, they are high enough.