Brits behind on DIY, says B&Q owner Kingfisher
By Rebecca Burn-Callander Thursday, 29 November 2012
Third-quarter sales have slumped at Kingfisher, Europe's largest home improvement chain, and DIY-shy customers in Britain are to blame.
If it ain’t broke, don’t fix it, or so the saying goes. But according to Kingfisher, even the ‘broke’ things aren’t getting fixed these days. B&Q’s like-for-like sales (which don’t include new stores) in the UK have fallen 4% to £906m in the three months to 27 October.
The home improvement giant cites the ‘generally weak consumer backdrop’, brought about by the recession, for the poor third-quarter showing. Across the whole group, revenue stands at £2.7bn, down 3.9% on last year.
However, by hiking up prices and cutting costs, Kingfisher has managed to plump up its retail profits. Across the international business, which includes Castorama and Brico Depot in France, retail profits are up 0.1% to £257m. In the UK, B&Q has managed a profit increase of 1.7% to hit £45m. There’s a lot of net cash sitting on the balance sheet too: at last count Kingfisher has £222m to spend next year.
Screwfix, Kingfisher’s wholesale business aimed at the UK’s smaller tradesman market, has also had a cracking three months. It’s new catalogue and the launch of a newfangled ‘click, pay and collect’ service has been a roaring success. Total sales are up 10.9% to £149m and retail profit has hit £14m, up 19.8% on last year.
Ian Cheshire, group CEO, seems content with the DIY chain’s performance: ‘Kingfisher is in good shape and I remain enthusiastic about our longer-term prospects,’ he says. He deserves a pat on the back for the part he’s played in Kingfisher’s profit boost: Cheshire’s new strategy of cutting out the middlemen to source products direct from manufacturers has sliced a lot of fat from the chain’s costs.
Not that the markets are all that impressed. With no end to the consumer gloom in sight, Kingfisher shares fell 4.2% to 276.5p this morning.