B&Q owner Kingfisher warns over profits again because of French sales woes

B&Q owner Kingfisher has warned over profits for the second time in as many months after being hit by ongoing sales woes in France and across Europe.

The group said it now expects full-year underlying pre-tax profits of about £560 million.

The alert comes after it slashed its guidance in September to around £590 million, having originally forecast £634 million for the year.

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Kingfisher said it was seeing a more “resilient” DIY market in the UK, with third quarter like-for-like B&Q sales up 1.1 per cent and Screwfix ahead 0.9 per cent, but this was offset by an 8.6 per cent tumble across its French arm, where it trades as Castorama and Brico Depot.

Sales were also lower across its other European markets, including a 9 per cent sales plunge in Poland.

Overall group comparable store sales fell 3.9 per cent in the three months to October 31.

The firm said it was cutting costs in France but it was not enough to counter falling sales.

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Thierry Garnier, chief executive of Kingfisher, said: “Our UK banners performed well in the third quarter, with B&Q, TradePoint and Screwfix growing sales and market share.

B&Q's owner Kingfisher has published its latest results. Picture: Rui Vieira/PA WireB&Q's owner Kingfisher has published its latest results. Picture: Rui Vieira/PA Wire
B&Q's owner Kingfisher has published its latest results. Picture: Rui Vieira/PA Wire

“In France, our performance was impacted by a weak retail market, as well as a delayed start to insulation, plumbing and heating sales – to which Brico Depot is more heavily weighted – due to unusually warm autumn weather, and strong prior year comparatives in these categories.”

“Reflecting the weakness of the French market, and notwithstanding our proactive cost actions, we have lowered our group profit guidance for the full year,” he added.

He said there would be some ongoing cost price inflation on products, although at a “significantly lower level”.

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The group said its fourth quarter to date had continued to see similar trading, with better trading in the UK and Ireland but ongoing weakness in France, where like-for-like sales are 7.5 per cent lower so far.

Overall group comparable sales fell 3.4 per cent in the three weeks to November 18.

The firm’s cost actions in France include “strengthened actions on flexing staffing levels”, cutting nonessential spending and structural cost cutting.

Richard Hunter, Head of Markets at interactive investor, said the new results “scotched any hopes of recovery at Kingfisher, with the French operation being the latest culprit for further weakness”.

He added: “The latest update makes for sorry reading.

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"A number of issues plagued the business over the quarter, ranging from the unseasonably warm weather which delayed the start of sales of products such as heating and insulation, to the general weakness of the French home improvement market, which deteriorated much more than had been expected.

"The quarter was also up against strong comparatives from the previous year, when customers had been anticipating energy price increases and potential power shortages, thus driving up sales of heating and energy efficient products.

“Further out, Kingfisher still has much to go for. The continuing trend of hybrid-working and energy efficient renovations help underpin sales, while the strength of the Screwfix brand is clear and expanding.

"For the moment, a positive direction of travel is proving hard to establish.”