Profits slump at Screwfix owner
B&Q’S owner has warned that profits will fall again this year as customers rein in spending on DIY projects. Kingfisher, which also owns Screwfix, said earnings in 202425 will be between £490 m to £550m – an annual drop of as much as £78 m. The FTSe100 retailer reported profit of £568m in the 12 months to January 31, down 25.1 pc on the previous year. The group had already downgraded profit expectations twice last autumn before publishing its full-year results yesterday. Customers have put house moves and home improvement projects on the back-burner due to high mortgage costs. And problems across its business in France – where it operates the Castorama and Brico Depot chains – also hit sales. In the UK and Ireland, sales rose 0.8pc and the company is planning to open 40 more Screwfix stores this year. But while the
Bank of england is expected to cut interest rates this summer in a boost for the property market, Kingfisher warned of a delay before sales pick up.
Chief executive Thierry Garnier said: ‘In the short term, while repairs, maintenance and renovation activity on existing homes continue to support resilient demand, we are cautious on the overall market outlook for 2024 due to the lag between housing demand and the home improvement demand.’
Susannah Streeter, head of markets at broker hargreaves Lansdown, said: ‘Kingfisher is still very much in repair mode, with its performance damaged by cost-of-living headwinds and a struggling housing market. There had been hopes that with interest rate cuts on the horizon, and UK house prices stabilising, that demand for DIY products and services would bounce back. But the company says due to the lag between house sales and renovation projects being green lit, recovery is further on the horizon.’
Kingfisher yesterday announced plans to restructure Castorama, warning that French consumer confidence and the housing market are expected to remain subdued. Sales in the country fell 5.9pc in the year to the end of January. Across the rest of europe sales fell 7.7 pc.
Garnier said the group, which has a 58,781-strong workforce, is planning to cut jobs, particularly as part of the French overhaul. however, he declined to say how many staff would be affected. Kingfisher employs 17,698 in France and has 25,106 staff in the UK and Ireland.
The company is rolling out UK initiatives across europe.
russ Mould, investment director at AJ Bell, said: ‘It will hope taking similar measures to those it has implemented in the UK will improve its prospects beyond these shores.’