Kingfisher interims fall 30% amid 'uncertain environment'
B&Q owner Kingfisher reported a fall in first-half profits against a tough comparator last year when DIY boomed during pandemic lockdowns and now amid a "more uncertain macroeconomic environment".
The company on Tuesday said pre-tax profits for the six months to July 31 fell by a third to £474m, while like-for-like sales were down 4.1% to £6.8bn. Kingfisher, which also owns Brico Depot in France, said it now expected full-year adjusted pre-tax profit of £730m - £770m having run several scenarios to account for a more volatile economic environment.
Kingfisher noted resilient sales across outdoor and ‘big-ticket’ items despite the economic outlook.
"Looking to the months ahead, although trading in the year to date has been in line with our expectations, we remain vigilant against the more uncertain economic outlook for the second half. We are therefore focused on delivering value to our customers at a time when they need it most," said chief executive Thierry Garnier.
DIY sales soared during Covid lockdowns as people spending more time at home took the opportunity to complete DIY projects. Now consumers are facing soaring energy prices and runaway inflation, meaning they have reined in discretionary spending.
The company warned that raw materials such as metal and plastic were becoming more expensive, while global supply chain disruption caused by higher demand, congestion at ports and the impact of Covid lockdowns continued.
It warned that it expects inflation pressures to persist in the second half of the year even though raw material prices have dropped from recent highs and freight costs have slowed since January.
Russ Mould, investment director at AJ Bell, said: "DIY stores benefited from two key things during lockdown. First they were, unlike many other retail businesses, able to trade from their physical premises.
"Second, people stuck indoors for long periods of time took a look at tired décor or that home improvement project they had put off and decided now was the time to ‘B&Q it’ as the slogan goes.
"Arguably both of those positive tailwinds have disappeared while at the same time the powerful headwind of a cost of living crisis has made it extremely difficult for Kingfisher to make any headway."
Reporting by Frank Prenesti at Sharecast.com