Kingfisher warns over ‘uncertain’ trading as profits fall
The B&Q owner posted a 10.1% fall in annual pre-tax profits to £682 million for the year to January 31.
B&Q owner Kingfisher has reported annual profits tumbling more than 10% and warned of an “uncertain” UK outlook after a recent hit to sales.
The group said B&Q like-for-like sales slumped 5.1% in the final three months of its year, while its better-performing Screwfix arm saw sales growth slow to 7.1% amid falling demand for so-called “big ticket” ranges such as kitchens.
Kingfisher posted a 10.1% fall in annual pre-tax profits to £682 million, but saw underlying profits edge 1.3% higher to £797 million.
Shares fell around 6% after the results.
It said overall UK and Ireland like-for-like sales rose 0.6% in the year to January 31 as Screwfix continued to offset sales woes at B&Q, with price inflation also providing a boost.
B&Q like-for-like sales dropped 2.8%, while trade-focused arm Screwfix enjoyed a 10.1% increase over the year.
But Kingfisher said “business disruption” knocked around 1.5% off its group-wide like-for-like sales as it was left with stock availability problems amid efforts to clear out old stock.
Chief executive Veronique Laury said: “Our performance this year has been mixed, however, with solid growth at Screwfix and Poland offset by continued weaker sales in France and some business disruption, principally reflecting product availability and clearance.
“We are acting on the causes of this disruption, however; next year will be another big year in our transformation plan.”
She added: “The outlook for our main markets is also mixed. The UK is more uncertain, France is encouraging yet volatile, whilst the market in Poland remains supportive.”
B&Q is in the middle of an overhaul, which has seen it shut 65 shops and slash around 3,000 jobs in the UK and Ireland over the last two years.
Kingfisher’s annual results showed that outside the UK, its French chains Castorama and Brico Depot saw like-for-like sales slump 3.5% as the stock availability issues compounded trading woes, despite a pick-up in the wider French DIY market.
Its operations in Poland offered a bright spot for the group, with like-for-like sales surging 6.3%.
Ms Laury insisted her turnaround was beginning to bear fruit and said it was set to deliver a £500 million boost to annual profits by the end of 2020-21.
However, the group will keep expansion on hold while the overhaul continues – except for its Screwfix chain, which saw 60 net new stores added in 2017, taking the total to 577.
Kingfisher eventually wants to have around 700 Screwfix outlets across the UK and Ireland.
George Salmon, an equity analyst at Hargreaves Lansdown, said: “After the struggles of DFS and Carpetright, these results are further evidence that Brits are cutting back on big-ticket domestic items.”
He added: “On the plus side, Kingfisher is working towards some serious cost savings and operational improvements. While progress is being made with these self-help measures, the changes are proving far from simple to implement. All told, things look difficult.”