Summer fails to nail down recovery for Kingfisher

The home improvements retailer has had a good summer but not enough to offset the poor first quarter

by Gabriella Griffith
Last Updated: 28 Nov 2013

Britain’s barbecue summer couldn’t have come soon enough for B&Q owner Kingfisher, but following three months of glorious sunshine and garden parties, its first half profits were still down 1.6% on last year.
 
The firm, which also owns Screwfix, as well as French chains Castorama and Brico Depot, said like for like sales in the half-year to 3 August were down 0.8%, meeting forecasts.
 
Total sales for the group rose 4.3% from £5.5bn to £5.7bn, and the group made an underlying pre-tax profit of £365m in the first half of the year, down from £371m the year before.
 
Despite the drop in yearly profits, things could have looked a lot worse for the group, had Britain not recorded its best summer for decades. The first half results were a marked improvement from the 4.2% decline in the first three months of the year.
 
‘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,’ said Ian Cheshire, chief executive of Kingfisher.
 
Poor consumer confidence is still affecting Kingfisher’s main markets, according to its chief. With our economy and that of the eurozone not out of the woods yet, homeowners are less inclined to carry out non essential home improvements - regardless of what the Joneses are up to.
 
‘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,’ he said.
 
One of Kingfisher’s plans to stem profit drops is to offload part of its stores, a process which has begun with ASDA taking over half of the Kingfisher store in Belvedere. A spokesperson for Kingfisher said it has not announced which shops will take up any available space, 'but it would be incorrect to say that all of them will be ASDA. The agreements are still subject to planning permission.'
 
Whether this will be enough to keep Kingfisher in the black remains to be seen. What is certain is, with temperatures plummeting across the UK, the summer looks to be over, so Kingfisher had best get its hammers out and batten down those hatches.

Tags:
Economy Retail

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