British-owned home improvement chain B&Q has reported a sharp downturn in profits at its Irish unit despite increasing sales by more than 23 per cent to €57.8 million in the year to January.
The chain's owner, Kingfisher, blamed the 25 per cent fall in operating profits to €3.72 million on the cost of opening a mini-warehouse store in Swords, north Dublin. That opening last December came at the very end of its financial year, so the new store made only a small financial contribution to the business.
B&Q has been in Ireland since March 2002 when it opened a large warehouse store at the Liffey Valley centre in west Dublin. The group opened a mini-warehouse store in Tallaght in October 2003.
The drop in profits last year, reported in newly-filed accounts for B&Q Ireland Ltd, brought operating margins in the Irish unit to 6.5 per cent, far below the operating margin of 9.8 per cent over the 300-strong network of B&Q stores in Britain and Ireland over the same period.
However, Kingfisher's chief spokesman insisted that the group was very happy with business at its Irish operation. Since the start of the current financial year, the company has opened another four mini-warehouse outlets in Cork, Limerick, Naas and Athlone.
"The fall in profits is simply due to the cost of opening more stores during the course of the financial year. Kingfisher is very pleased with its B&Q business in Ireland. The underlying business is very strong and the stores are trading well," he said.
The poor profit performance last year was recorded against the backdrop of booming retail sales and consolidation and intensifying competition in the booming Irish home improvement and DIY market. Chief among the most recent developments was Grafton's €338 million takeover of the Heiton group, which brought Heiton's Atlantic Homecare chain into the same network as Grafton's Woodies chain. B&Q also faces competition from Homebase House and Garden, controlled by Argos owner Great Universal Stores.
Kingfisher is struggling with difficult conditions in its home market this year. B&Q Ireland turned a pretax profit last year of €4.06 million, down from €5.03 million.
