Britain's Kingfisher warns suppliers struggling to cope with DIY boom

By James Davey

LONDON (Reuters) -British home improvement retailer Kingfisher raised its profit outlook on robust trading during the COVID-19 pandemic but cautioned that suppliers were struggling to keep up with order levels which could impact availability and prices for consumers.

The group, which owns B&Q and Screwfix in the United Kingdom and Castorama and Brico Depot in France and other markets, said on Thursday the situation had been exacerbated by challenges around the supply of raw materials such as timber, steel and copper.

It said the pandemic, together with events such as the recent Suez Canal container ship blockage, continued to place a strain on the international logistics infrastructure, in particular the cost and availability of shipping containers.

"We expect these challenges to continue for at least the next six months," Kingfisher warned.

"As largely anticipated, we are also seeing inflation pressure from certain raw materials and shipping container costs," it said.

The group said that despite the challenges its overall stock position was gradually improving and it was committed to remaining competitive with its prices.

Many people have rediscovered do-it-yourself (DIY) during the crisis as they spend more time at home, have fewer leisure options and travel less.

Shares in Kingfisher, which have more than doubled over the last year, were down 1.3% at 0851 GMT.

Its like-for-like sales soared 64.2% year-on-year in the three months to April 30, its fiscal first quarter.

Like-for-like sales were up 22.5% compared with the same period two years ago - before the pandemic started to disrupt trading last year.

Kingfisher said growth had slowed in its second quarter as comparative numbers got considerably tougher, with like-for-like sales up 8.2% year-on-year.

It raised its forecast for first half 2021-22 like-for-like sales growth to "mid-to-high teens" from "low double-digit" previously and said it now expects first half adjusted pretax profit to be in the range of 580 million pounds to 600 million pounds ($818-$847 million), more than it had previously estimated.

For the second half Kingfisher maintained its guidance for like-for-like sales to fall by 5% to 15%, given harder comparative numbers and uncertainty over the macroeconomic and consumer environment.

For the full year the group forecast growth in adjusted pretax profit, excluding 85 million pounds of non-recurring cost savings, "ahead of sales". Its previous guidance was profit growth "in line with sales". It made 786 million pounds in 2020-21.

($1 = 0.7087 pounds)

(Reporting by James Davey; Editing by Michael Holden, Simon Cameron-Moore and Muralikumar Anantharaman)