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B&Q owner lifts profit forecast amid strong demand for kitchens B&Q owner lifts profit forecast amid strong demand for kitchens
(about 3 hours later)
Kingfisher says garden accessories, outdoor paint and plants sold well because of good weather in the UKKingfisher says garden accessories, outdoor paint and plants sold well because of good weather in the UK
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The owner of B&Q and Screwfix has upgraded its profit forecast after reporting strong demand for its new kitchen ranges and garden products amid good summer weather. The owner of B&Q and Screwfix has upgraded its profit forecast after reporting strong demand for new kitchen ranges and garden products amid good summer weather.
Kingfisher, which runs DIY stores across Europe, including Castorama and Brico Dépôt France in France, posted sales growth of 1.9% at established stores in the six months to 31 July. The Kingfisher chief executive, Thierry Garnier, talked of “slowly rising consumer confidence” with better mortgage affordability and stabilising property sales. “We have seen a resilient consumer in the UK,” he added.
B&Q reported comparable sales growth of 4.4%, while Screwfix contributed 3% growth, and the retailer said trends were improving in France and Poland. Overall adjusted pre-tax profit rose by 10.2% to £368m. Kingfisher, which runs DIY stores across Europe, including Castorama and Brico Dépôt in France, posted sales growth of 1.9% at established stores in the six months to 31 July. This was driven by selling more items, with prices broadly flat.
The Kingfisher chief executive, Thierry Garnier, said sales of big-ticket items such as kitchens and bathrooms had grown for a third quarter in a row. Kingfisher now sells three price ranges of kitchens – Essential, Select, and Signature – to broaden its customer appeal. At B&Q, kitchen installations were up 36% year on year. Garnier said sales of big-ticket purchases such as kitchens and bathrooms had grown for a third quarter in a row.
The company also hailed robust sales growth in seasonal products, including garden accessories, outdoor paint and plants, because of good weather in the UK. The retailer now sells three price ranges of kitchens – Essential, Select, and Signature – to broaden its customer appeal, and the cheapest range made up a quarter of kitchen sales in the first half. At B&Q, kitchen installations were up 36% year on year.
“Our expectations for our markets for the year remain consistent with what we outlined in March, while mindful of mixed consumer sentiment and political uncertainty,” Garnier said. The company hailed robust sales growth in seasonal products, including gazebos, pergolas and garden furniture, outdoor paint and plants, because of good weather in the UK, while in Poland spring and summer were unusually cold.
“Combined with our first-half performance, this gives us the confidence to upgrade our full-year profit and free cashflow guidance and to accelerate our share buyback programme.” The retail group has also benefited from more than 50 store closures at its rival Homebase, which fell into administration last December. The bulk of Homebase shops were bought by the owner of The Range homeware chain.
Kingfisher is now targeting the upper end of its full-year profit range of £480m to £540m. B&Q reported comparable sales growth of 4.4% in the first half, while Screwfix contributed 3% growth. France and Poland were weaker but the retailer said trends were improving. Kingfisher’s overall adjusted pre-tax profit rose by 10.2% to £368m, and its order book for big-ticket items was up in double digits at the end of July.
However, it flagged extra costs of £145m from wage inflation, higher UK employer national insurance contributions, increased social taxes in France and the new packaging fees in the UK. Kingfisher is now targeting the upper end of its full-year profit range of £480m to £540m. Shares in Kingfisher rose 17% in Londonon Tuesday morning.
The company is among retailers that have been lobbying the government over plans for higher property taxes on larger buildings. Garnier said business rates were a “very unfair tax that doesn’t exist elsewhere in Europe”. The British Retail Consortium said up to 400 large shops in the UK were at risk of closure if the higher charges were introduced.
Kingfisher is “rightsizing” B&Q stores, reducing some that are too big, but the move is not linked to tax changes, Garnier insisted, but intended to adapt them to the needs of smaller households.
The retailer flagged extra costs of £145m from wage inflation, higher UK employer national insurance contributions, increased social taxes in France and the new packaging fees in the UK.
It expects to fully offset them through higher gross profit margins and cost-saving measures, and also benefited from a £33m one-off business rates refund in the UK.It expects to fully offset them through higher gross profit margins and cost-saving measures, and also benefited from a £33m one-off business rates refund in the UK.
Shares in Kingfisher rose 17% in early trading in London on Tuesday. Kingfisher recently announced 672 job cuts at B&Q, mostly in stores, with 65 to go at its London headquarters, as it attempts to reduce costs.
It is renegotiating leases in the UK, and has introduced self-checkouts and better AI tools. For customers, it is offering a visual search tool that scans a broken part and quickly finds a replacement from the B&Q catalogue.