It’s a ‘tale of two quarters’ for Kingfisher

Parent Kingfisher cited a “tale of two quarters”, with sales of outdoor goods at B&Q falling 11 per cent in February to April, but bouncing back 17 per cent between May and early August.

Volatile weather resulted in a 1.6 per cent dip in adjusted pre-tax profits to £365m for the 26 weeks to the start of August, but Kingfisher’s sales grew 4.3 per cent to £5.7bn on continued expansion and flattering currency swings.

Kingfisher, which also owns trade counter chain Screwfix and Castorama and Brico Depot in France, said consumers remain nervous about spending across its major markets, despite increasing signs of economic optimism.

July’s heatwave compared with a sodden summer in 2012, and saw sales of barbecues leap 26 per cent and charcoal soar 48 per cent in the second quarter. Watering equipment surged 69 per cent and sales of outdoor plant pots rose by a third.

But sales of indoor paint dropped 10 per cent during the quarter as households stayed outdoors. B&Q’s DIY sales fell one per cent during the half, compared with a market which advanced two per cent.

The company said: “It was a tale of two quarters with the coldest weather for 50 years in March and a heatwave in July.”

B&Q is “rightsizing” by hiving off surplus space in its stores to companies such as supermarkets. It said plans to shrink its footprint at 18 stores would mean five per cent less space, annual rent savings of £16m and rate cuts of £7m.

But Kingfisher is expanding its Screwfix business, which saw underlying sales increase 3.6 per cent and total sales soar 14.6 per cent to £313m, defying a tough market for small tradesmen.

It has launched a Screwfix pilot in Germany, with four outlets due to open next summer, and the brand’s website has been rolled out to more than 20 European countries.

Chief executive Ian Cheshire said: “After a difficult first quarter, in which sales and profits were affected by record bad weather, we were able to capitalise on the better weather in the second quarter, particularly in the UK, to grow quarterly profits and so deliver a broadly flat result across the half.

“However, underlying consumer confidence remains weak in our major markets, so we continue to focus hard on our self-help initiatives to drive growth, margin and cost efficiencies.”

UK retailers are still taking a cautious view of the market for the year ahead even though official data and surveys have shown an improving outlook for UK consumer spending, which generates about two-thirds of gross domestic product.

Kingfisher’s sales in the UK and Ireland dipped one per cent on a like-for-like basis, but total revenues edged up 0.3 per cent to £2.3bn. Profits in the UK and Ireland were broadly flat at £141m.

Kingfisher has more than 650 B&Q and Screwfix stores in the UK and Ireland, employing more than 25,600 staff.

Europe’s biggest home improvement retailer opened a net 29 new stores across Europe during the half, of which 18 in the UK were mainly Screwfix outlets.

It plans another 47 new outlets in its second half, including 42 in the UK – again mainly Screwfix branches.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: “The results are broadly in line with forecasts, with management, unlike the Chancellor, still cautious and hesitant in proclaiming an economic recovery.

“Weather volatility has played a major part, whilst divergence in consumer confidence across its geographical footprint continues to impact.

“On the upside, management initiatives including the downsizing of certain UK stores in order to reduce rents and the upgrading of online facilities continue.”