Kingfisher sales and profits hit by wet weather
Kingfisher, the owner of DIY retailer B&Q, said the unseasonably wet weather in the first half of its financial year cut its profits in the UK and northern Europe by £30 million.
In the 26 weeks to 28 July, the group saw a 15.5% decline in adjusted pre-tax profit to £371 million. Reported profit before taxation decreased by 16.9% to £364 million. Total sales fell 3.3% to £5.4 billion while like-for-like sales dropped by 2.8%.
Commenting on the results CEO Ian Cheshire said: "This has been a tough first half with unprecedented wet weather throughout the key spring and summer seasons in Northern Europe. This affected footfall and demand for outdoor maintenance, gardening and leisure products, which normally account for a significant proportion of our first half sales."
Sales in the UK were the hit hard by the weather. Kingfisher UK & Ireland total sales were down 1.8% to £2.3 billion, dropping 5.5% on a like-for-like basis. Retail profit declined by 20.2% to £145 million principally reflecting weak seasonal sales, additional markdowns to clear seasonal stocks and accelerated range change.
At BQ, UK & Ireland total sales were down 3% to £2 billion. Like-for like sales fell by 6%. The wet weather led to an 11% fall in sales of outdoor seasonal products with average footfall down 20% in the severely weather-affected weeks. Retail profit declined by 24.1% to £125 million.
Gross margins were down 40 basis points, despite on-going sourcing benefits, reflecting the markdowns needed to successfully clear seasonal stocks and the decision to accelerate clearance ahead of the national rollout of new, common own brand ranges of tiling and décor products into Q2
Sales in France, where the group's brands are Castorama and Brico Dépôt, like-for-like sales were down 0.6% year-on-year. Retail profit in France declined by 4.9% to £191 million year but was up 2% on a constant currency basis.
Kingfisher opened 35 new stores in the period including 28 in the UK, two in France, three in Spain and one each in Russia and Turkey. It also converted and integrated 28 Focus DIY stores, which contributed 3% to B&Q total sales growth. In addition, the group secured a site for a new small store model in China. Around a third of the size of a current B&Q China store, the trial store will target the Do-it-For-Me apartment design market.
Cheshire added: "Whilst an uncertain economic backdrop has been a feature of our markets for some time, we recognise that this is unlikely to improve for a while. In the short term we will continue to focus on trading effectively, whatever the market conditions, whilst accelerating our self-help initiatives where practical and remaining agile in order to capitalise on opportunities as they arise.
"Having got off to a good start with our new 'Creating the Leader' programme, I am very confident that we can create a world class home improvement retailer and unlock the full potential of our international talent and scale."
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