The owner of the B&Q, Screwfix and Castorama DIY chains has warned that profits will fall this year, piling pressure on the group to accelerate its turnaround plan.
Kingfisher said on Monday that it was “cautious on the overall market outlook for 2024 due to the lag between housing demand and home improvement demand”.
For the current financial year, Kingfisher forecast adjusted pretax profits of £490 million (€571 million) to £550 million, below the £560 million that analysts had predicted. The gloomy outlook came after adjusted pretax profits dropped 25 per cent to £568 million in the 12 months to the end of January.
Kingfisher boomed during the pandemic as locked-down consumers renovated their homes, but it has struggled since, cutting its profit outlook in September and November last year. DIY markets are typically linked to the strength of the housing market as people spend money renovating their properties after moving. The company operates eight B&Q stores and 35 Screwfix outlets in the Republic.
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The group said like-for-like sales in the first quarter were down 2.3 per cent from the same period a year earlier, but had improved compared with the fourth quarter of last year.
Shares in the FTSE 100 group fell almost 3 per cent in early trading on Monday before paring those losses.
Chief executive Thierry Garnier said the UK and Ireland were “positive standouts” across the group’s key markets, while sales on the continent had stalled owing to “historically low consumer confidence”.
Kingfisher’s largest UK brand, B&Q, grew market share and its sales rose last year, supported in particular by the success of its ecommerce marketplace.
Screwfix, the UK chain of hardware stores, also recorded growing sales, as the company announced it planned to launch up to 40 new outlets in the UK and Ireland in 2024-2025 and grow that number to more than 1,000 in the medium term.
“Good performance was seen across most categories, with tools and hardware, building and joinery and outdoor performing particularly well,” the company said.
According to analysts at RBC Capital Markets, there is “potential for DIY trends to be fairly resilient, helped by consumers looking to save money and to improve their homes”.
However, like-for-like sales fell 5.9 per cent in France and 9.5 per cent in Poland last year, amid an “extremely tough macroeconomic background”.
The group on Monday outlined its plans for improving performance of its French brand Castorama, which had already changed its leadership and shut nine underperforming stores since 2020.
Mr Garnier, who has been spearheading a turnaround of the company, said the group had identified about a third of its Castorama stores as the lowest performing as part of a push to right-size and modernise operations and reduce costs. Alain Rabec, who has been chief executive of Kingfisher’s French division since 2019, will retire in September.
The company said it would launch new ecommerce platforms in France and Poland, in the hope of replicating the success of its UK-based B&Q online marketplace. The group’s ecommerce sales increased 6.4 per cent last year. – Copyright The Financial Times Limited 2024
(c) Copyright Thomson Reuters 2024
