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B&Q owner Kingfisher's sales hammered by bad weather B&Q and Homebase sales hammered by bad weather
(about 3 hours later)
Kingfisher, Europe’s largest home improvement retailer, reported another fall in quarterly sales on Thursday, hurt by a slowdown at its B&Q business in the UK, weak sales in France and continued disruption from its restructuring plan. This summer has been a DIY disaster for the UK’s two biggest home improvement chains with both reporting falling sales as they struggle with wet weather and disruption from major restructuring plans.
The firm, which trades as B&Q and Screwfix in Britain and Castorama and Brico Depot in France and other markets, said it remained cautious on the outlook for the second half. Kingfisher, Europe’s largest home improvement retailer, reported a 4.7% fall in sales at its established B&Q stores in the three months to the end of July.
Homebase, which is in the process of transforming into an outpost of the Australian Bunnings chain, revealed a 4.3% fall in sales at stores open more than a year in the three months to the end of June.
Total sales fell 6.8% and underlying sales at established Homebase and Bunnings stores by 4.3% as they cut prices and suffered disruption from changing their look and product ranges.
The chains, which are owned by Wesfarmers retail group, reported a loss before interest and tax of £54m after £19m of restructuring costs. Revenues were £1.2bn in the first full financial year after Wesfarmers acquired Homebase for £340m.
Kingfisher, which also trades as Screwfix in Britain and Castorama and Brico Depot in France and other markets, said it remained cautious on the outlook for the second half as it continues to unify more product ranges across the group and implement new IT systems.
The company’s share price slumped 5% as analysts said sales at B&Q in the UK and Ireland were worse than the 3% fall expected. Sales in France, Russia and Spain also fell back but there was strong growth at the UK’s Screwfix business where sales rose 17.2% and a 4% rise in underlying sales in Poland.
B&Q suffered from poor availability on some products amid business changes, as well as a damper summer than last year which hit sales of barbecues, garden furniture and other outdoor goods.
A warm spring also led shoppers to buy some of these items earlier than usual, hitting sales in the following quarter so that seasonal goods fell 10.7% compared to a 9.6% rise in the three months to the end of July.
Kingfisher is in the second year of a plan to boost annual profit by £500m from 2021 that will cost £800m over five years to deliver. It involves unifying product ranges across the business, improving e-commerce capabilities and driving efficiencies.Kingfisher is in the second year of a plan to boost annual profit by £500m from 2021 that will cost £800m over five years to deliver. It involves unifying product ranges across the business, improving e-commerce capabilities and driving efficiencies.
The group said like-for-like sales fell by 1.9% in its second quarter to 31 July – a deterioration from a fall of 0.6% in the previous quarter.
Like-for-like sales in the UK and Ireland fell by 1.0% and were down by 3.8% in France.
In the UK B&Q’s like-for-like sales fell by 4.7% – worse than analysts’ expectations of a fall of about 3%. It reflected a 10.7% dip in the sales of seasonal goods such as barbecues and garden furniture, after a strong first quarter boosted by better weather. Screwfix’s like-for-like sales rose by 10.8%. Chief executive Véronique Laury said that the disruption was “on an improving trend”.
“Having been very aware that this year would be challenging given the step up in transformation activity, we already have self-help plans in place to support our overall year two performance,” said chief executive Véronique Laury. “Having been very aware that this year would be challenging given the step up in transformation activity, we already have self-help plans in place to support our overall year two performance,” she said. .
Kingfisher said it was comfortable with analysts’ average forecast of underlying earnings per share of 26p for the full 2017-18 year. Wesfarmers said that performance in the UK would continue to be negatively affected by disproportionate costs and disruptions associated with store revamps until its Bunnings chain reached scale.
Shares in the group were the biggest fallers in the FTSE 100, dropping just over 3% to 297p. Fifteen to 20 pilot Bunnings stores are expected to be converted from Homebase stores by the end of December.