DIY trouble for B&Q and Homebase owners as trading stutters
THE country’s two biggest home improvement chains have suffered a DIY calamity with B&Q posting a slump in sales and the owner of Homebase recording a loss of more than £50m.
Shares in B&Q owner Kingfisher fell 4.1pc to 294.8p as it blamed wet weather and teething problems with its restructuring programme for an 8pc slump in second-quarter sales. Likefor-like sales fell by 4.7pc during the three months to July 31.
Kingfisher also admitted that ongoing problems in its French business, which includes Castorama and Brico Depot, had continued over the summer, with sales plunging by 3.8pc to £1.2bn.
In the UK, Kingfisher said that B&Q was affected by a tough comparison with last year, as total sales fell by 7.8pc to £967m, worse than analyst expectations.
The decline was partially offset by its tradesmen-focused Screwfix business, where sales rose by 10.8pc thanks to new specialist ranges and the chain’s “digital capability”.
The company is undergoing an £800m overhaul of its business, which it hopes will bring in around £500m more in profit each year by 2021. But Kingfisher warned that the transformation, which includes removing the amount of duplication of products across its businesses in the UK, France, Russia and Spain, was causing “business disruption”.
Veronique Laury, the chief executive of the group, said there was a “significant amount of change” planned for the second half of the year. She added that she was “well aware this year would be challenging given the stepup in transformation activity” and that Kingfisher remained “cautious” on the outlook for the second half of the year.
George Salmon, an analyst at Hargreaves Lansdown, said: “It’s sometimes difficult to get a grip on the underlying direction of travel at Kingfisher, so dependent is the group on the vagaries of the weather.
“However, with the transformative ‘One Kingfisher’ plan suffering from disruption and like-for-like sales in both France and the UK in negative territory, there aren’t many bright spots for investors in these results.”
“A silver lining of sorts is that it looks like Kingfisher isn’t alone in having difficulties in the UK. The group’s flagship B&Q chain saw like-for-like sales fall 4.7pc, which is similar to the fall at Bunnings UK, the new owner of Homebase”, he added.
The British arm of Homebase owner Bunnings reported a £54m annual loss in its first full year of ownership of the DIY chain.
Bunnings UK and Ireland said that onerous costs related to its purchase of Homebase, as well as work to overhaul stores, had affected trading, with sales of kitchen and bathroom products particularly affected. The company, which is part of the Australian Wesfarmers retail conglomerate, bought Homebase for £340m in February last year. The firm warned that “trading is anticipated to remain challenging, particularly in the short term, as customers continue to adjust to the new offer”.