Yahoo Finance B&Q and Screwfix owner to return £23m in Covid furlough pay
The DIY group behind B&Q and Screwfix has said it intends to return £23m of furlough pay to the government after sales and profits at its UK business climbed during the pandemic.
Sales rose 3.7% at Kingfisher’s UK business in the six months to 31 July – despite several weeks during which stores were closed or only partially open – as families snapped up garden decking, vegetable seeds, paint and other decorating materials to improve their homes during the national lockdown.
Retail profits in the UK rose more than 47% to £411m as the company benefited from £45m in business rates relief and cut spending on non-essential store maintenance, marketing and IT.
Thierry Garnier, the Kingfisher chief executive, said: “The crisis has prompted more people to rediscover their homes and find pleasure in making them better. It is creating new home improvement needs, as people seek new ways to use space or adjust to working from home. It’s also clear that customers are becoming more comfortable with ordering online.”
Shares jumped 9% after the update on Tuesday morning, making Kingfisher the top riser on the FTSE 100.
The group, which also owns the Castorama and Brico Dépôt DIY chains in France and home improvement stores in Poland, Romania, Russia, Spain and Portugal, said it had made £55m in total furlough claims across all its markets in the first half of the year.
It intends to pay back the £23m received in the UK unless there are any “material changes in the trading environment” and has also said it will not be claiming the £1,000 per staff member bonus for rehiring workers on the furlough scheme.
Kingfisher told shareholders it would not be paying a half-year dividend as it hoards cash to see it through potentially tougher times towards the end of the year.
Total sales for the group slid 1.1% to £5.9bn in the half year as growth in the UK, Poland and Romania was offset by continued declines in France, Russia and southern Europe. But pretax profits jumped 62.4% to £398m after cost savings, government bailouts and the cancellation of the dividend.
Online sales rose 164% to account for nearly 20% of total sales – up from 7% a year ago – as the group stepped up its plan to pick and deliver orders from stores.
Fears of a slowdown because of economic hardship caused by the pandemic are yet to be felt at the DIY group. Sales rose nearly 17% between the end of July and 19 September.
The company said availability in its stores had been affected because suppliers were struggling to keep up with “exceptional demand” for paint, decorating materials, outdoor and building materials ranges.
