Barratt Redrow warns consumer confidence remains 'fragile', shares slide

(Sharecast News) - Shares in blue chip housebuilder Barratt Redrow fell sharply on Tuesday, after it warned both profits and completions would be lower this year. Updating on trading for the year to 29 June, the blue chip housebuilder - which was formed at the end of 2024, when Barratt Developments acquired Redrow in a £2.5bn deal - said it had been a "solid performance", despite a "challenging" market backdrop.

Total home completions were 16,565, compared to 14,004 at Redrow or 17,972 on an aggregated basis a year previously. It was also slightly below expectations,

David Thomas, chief executive, acknowledged that there had been fewer international and investor completions than expected in the London businesses.

But he said cost savings from the merger were ahead of schedule, and the enlarged group was on track to meet consensus for adjusted pre-tax profits, of £582.6m.

However, looking to the current year, and the firm warned that homebuyer confidence remained "fragile", with total home completions likely to be down year-on-year, in the range of 17,200 to 17,800.

It also said profits would take a £98m hit, due to new safety charges.

As a result, pre-tax profits for the current year are expected to fall around 10% short of current market expectations, for around £712m.

As at 0845 BST, the stock had lost 10% at 375.1p.

However, Barratt Redrow insisted: "We are executing the integration of Redrow at pace, we have a strong balance sheet and a solid forward sales position, and we believe we are well positioned as we enter the 2026 full year."

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: "This disappointment has seen the share price fall in early trading.

"Despite this, the balance sheet remains in great shape. Structuring the acquisition of Redrow as a share offer means there's still plenty of cash on the balance sheet. This means the ongoing share buyback programme, of at least £100m annually and prospective yield of 4.3% looks to be on solid ground."

Richard Hunter, head of markets at Interactive Investor, said: "Redrow is navigating its current strategy with caution amid a sector which is clearly being buffeted by wider economic concerns.

"There are, however, some warning signals which are to a large extent out of the group's control.

"Consumer caution and affordability issues are a headwind for the sector, particularly given the possibility of more tax rises to come. There is also a concerning trend with the group's London market, where demand is current weak."

Barratt Redrow is due to post full-year numbers on 17 September.