UK Markets closed

Kingfisher profits fall after ‘disappointing’ B&Q sales

By Holly Williams, PA Deputy City Editor

B&Q owner Kingfisher has seen half-year profits drop 12.5% as sales at the DIY chain remained under pressure amid a swingeing overhaul.

The group reported pre-tax profits of £245 million for the six months to July 31 against £280 million a year earlier.

The group said the UK performance and that of its operations in France were “disappointing” and cautioned the outlook for the rest of the year was mixed across the group.

Kingfisher chief executive Veronique Laury steps down next week (Kingfisher/PA)

Its British business has been facing “ongoing uncertainty” as Brexit continues to weigh on consumer confidence, while this was compounded by disruption from its continuing turnaround programme, according to the firm.

Shares in Kingfisher fell 2%.

Its results showed that in the UK and Ireland, like-for-like B&Q sales dropped 3.2% over the first half, although this was partially offset by growth of 5.1% at its Screwfix arm.

Overall UK and Ireland comparable store sales dropped 0.7%, while retail profit for the division was 1.7% lower at £277 million.

The results mark the last for chief executive Veronique Laury, who hands over the reins to new boss Thierry Garnier on September 25.

She has been leading a five-year turnaround programme in the UK and Ireland, which has seen Kingfisher shut 65 B&Q shops and slash about 3,000 jobs.

It has also been shaking up its ranges and improving its online offering.

Chairman Andy Cosslett admitted customers have been defecting to rivals as its revamp plan and “change fatigue” has taken its toll on the business.

He said: “We are trying to concertina into a short space of time what many businesses would take many years to do – inevitably the customer sees that and that impacts on our stores.”

“Some of our competitors have made gains as a result of that,” he added.

But Mr Cosslett said there are areas of the overhaul in which it could have “done better”.

Mr Garnier will bring a much-needed “fresh perspective”, he added.

Its results showed like-for-like sales fell 4.4% across its French business, where it operates Brico Depot and Castorama France.

Sales lifted 1.2% across its other international operations, including Poland and Romania.

Kingfisher said that for the remainder of the year it will focus on its ongoing turnaround as well as launching new ranges, such as B&Q kitchens.

But gross profit margins will remain flat for the full year, taking into account costs including up to £35 million in clearance sales for former B&Q kitchens ranges.

On no-deal Brexit preparations, Kingfisher said it had “updated” how it imports goods to prepare for possible disruption at ports, but it said it already had enough stock in place and no further significant stockpiling was necessary at this stage.

Emma-Lou Montgomery, associate director from Fidelity Personal Investing’s share-dealing service, said: “DIY chain B&Q continues to be a spanner in the works at Kingfisher, dragging like-for-like figures down, despite growth coming in from Screwfix.

“Whether Thierry Garnier, who arrives next week to take over from outgoing chief executive Veronique Laury, will finish the job and turn around the group, which has already spent three and a half years so far failing to make sufficient progress, remains to be seen.”