B&Q hammers on as profits drop by a third

Bosses at the parent company of DIY chain B&Q have blamed soggy weather after profits plummeted by almost a third during the 13 weeks to the beginning of May.

by Emma Haslett
Last Updated: 11 Sep 2013

Kingfisher, which also owns Screwfix in the UK, as well as French chains Castorama and Brico Depot, has had a broken drill bit of a first quarter, with profits dropping by 29.2% to £114m, well below analysts’ forecasts of £137m, while revenues slumped by 2.1% to £2.6bn and total sales fell 3.4% to £1.07bn. That was pushed down by a 4.7% drop in like-for-like sales in the UK and Ireland, and a 5.6% fall across the channel in France.

Kingfisher chief exec Ian Cheshire has been quick to blame the ‘unseasonably cold’ weather, as have lots of retailers in recent months, saying that ‘general footfall was down and demand for outdoor maintenance, gardening and leisure products was adversely affected for a second year running.

But, in an attempt to remain optimistic, he adds that the company reckons it can make up for (some) lost time over the next few months.

‘We still have our key summer season to come and we are ready to capitalise on any improvement in conditions during this peak trading period.’

It’s easy for retailers to blame the bad weather for their poor performances, but some analysts reckon that in Kingfisher’s case, the problem may be more endemic. As John Ibbotson, director of retail consultant Retail Vision points out, DIY is becoming more of a niche pursuit.

‘House prices and tighter lending criteria mean that more people than ever are renting — and tenants don’t do DIY. This move away from home-ownership is a major challenge for DIY stores.’

Alas – if a report by the Paris-based Organisation for Economic Cooperation and Development published this morning is anything to go by, this problem is unlikely to go away. Its study shows that British house prices are 31% too high compared with rents and 21% over-priced compared with incomes – which suggests that the number of people renting is only likely to increase. Bad news for DIY stores –more encouraging, though, for A&E departments…

Finance Retail

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