Wednesday 16 October 2019

B&Q's Irish sales flat, but profits rise to €4m as it cuts overheads

DIY: The B&Q chain is owned by the UK-based Kingfisher group, which has announced plans to exit Russia, Spain and Portugal
DIY: The B&Q chain is owned by the UK-based Kingfisher group, which has announced plans to exit Russia, Spain and Portugal
John Mulligan

John Mulligan

Sales at the Irish arm of the B&Q DIY chain were flat at €85m in its last financial year, but its pre-tax profit rose to €4m from €3.5m as its administrative expenses declined.

The retailer, which is part of the UK's Kingfisher group which owns the Screwfix chain, operates from eight stores in Ireland.

The company noted in newly-filed accounts for the 12 months to the end of last January, that its sales per square metre of selling space amounted to €1,638 last year compared to €1,665 in 2016.

B&Q, which employs about 550 people in Ireland, noted that its administrative expenses declined to €5.1m last year from almost €6.3m a year earlier.

The accounts note that B&Q is attempting to create a "unified, unique and leading home improvement offer".

Sales at B&Q's Irish and UK outlets were hit earlier this year by the 'Beast from the East' storm that dumped snow across the country.

B&Q's Irish arm entered examinership in 2013 during the depths of the downturn. Its parent firm set aside more than €20m to fund the restructuring of its business here. The funds included provisions for the impairment of properties and the estimated costs of exiting leases. Its Irish arm had been racking up millions of euro of losses at the time.

Kingfisher is Europe's second-largest home improvement retailer.

Last week, it reported weak quarterly sales in France and said it would pull out of Russia, Spain and Portugal. That raised questions over its plans to boost profits.

The group, which across Europe trails France's Groupe Adeo, is in the third year of a five-year programme to raise annual profit by £500m (€566m) from 2021.

However, profits are forecast to go backwards in its 2018-19 year.

Kingfisher's shares tumbled after the group, whose main businesses are B&Q and Screwfix in the UK and Ireland, and Castorama and Brico Depot in France, reported a fall in underlying sales in its third quarter.

Castorama continued to trade particularly poorly and underperformed the wider French market.

CEO Véronique Laury, who has cut Castorama's prices and revamped its marketing, warned "there is no quick fix" for that business. "We believe Kingfisher's transformation plan will not yield the margin benefits it was supposed to, so there will be more calls for a break-up, but in between a margin reset may be necessary," said RBC Europe analyst Richard Chamberlain, who has a "sector perform" rating on the stock.

Kingfisher's like-for-like sales fell 1.3pc the third quarter.

Additional reporting: Reuters

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