Kingfisher Soars: Profit Outlook Up Despite B&Q Sales Dip! 🚀
Kingfisher Soars: Profit Outlook Up Despite B&Q Sales Dip! 🚀
Home improvement giant Kingfisher surprises with a profit upgrade, defying flagging B&Q sales. Discover how Screwfix and strategic moves are boosting their bottom line!
Home improvement retail group Kingfisher has defied expectations, hiking its annual profit outlook even as its flagship B&Q stores saw a dip in sales. The company's shares jumped by 10% following the announcement, reflecting investor confidence in its resilience amidst a challenging consumer environment.
In the UK and Ireland, B&Q's like-for-like sales decreased by 1.8% in the second quarter, with 'big ticket' items like bathroom ranges plunging 8.1%.
This suggests that Britons are still hesitant to splurge on larger home renovation projects.
However, this decline was an improvement from the 4.1% fall reported in the first quarter, partially due to a recovery in seasonal item demand spurred by summer heatwaves.
Online sales for B&Q also saw a significant boost, climbing 19.3% as customers opted for digital shopping in the high temperatures. Kingfisher's trade-focused brand, Screwfix, was a star performer, showing strong sales growth with a 7.1% jump in the second quarter.
This robust performance helped offset B&Q's softer figures, leading to an overall 1.6% rise in UK and Ireland same-store sales for the second quarter and a 0.4% increase over the first half of the year. Across the wider group, which includes European brands like Brico Depot and Castorama, Kingfisher reported a 9.9% rise in underlying pre-tax profits to £404 million for the six months ending July 31.
This figure was slightly bolstered by a one-off £14 million UK business rates refund.
On a statutory basis, pre-tax profits climbed 18.4% to £400 million.
Outgoing chief executive Thierry Garnier acknowledged the 'mixed' consumer environment but expressed confidence in the company's consistent performance and strategic progress, which enabled the guidance upgrade.
Garnier, who is set to step down after nearly seven years, also highlighted the impact of extreme weather, noting that record summer heatwaves boosted sales of air conditioning and outdoor living products, but negatively affected sales of items like paint and plants as DIY work slowed down. Looking ahead, Garnier described the outlook for consumer spending as 'not fantastic' but stable, attributing ongoing caution to high inflation and waning consumer confidence.
He also advocated for changes to the UK's business rates system to create a more level playing field between physical stores and online retailers, emphasizing the need for stability and certainty for businesses like Kingfisher. Analysts from Peel Hunt echoed a positive sentiment, praising Kingfisher's 'solid' half-year results and its ability to achieve growth despite a 'lacklustre market backdrop'.
