The Press and Journal (Aberdeen and Aberdeenshire)
B&Q owner Kingfisher profits take hit of 30%
Retail: UK customers tighten belts
B&Q owner Kingfisher has seen half-year profits tumble after being hit by woes in its French arm and amid consumer belttightening in the UK.
Shares in the retailer fell as much as 8% in early trading after the group posted a 30% fall in statutory pre-tax profits to £281 million for the six months to July 31, with profits down 14.8% on an underlying basis at £375m.
Kingfisher said the profits slump came after earnings dropped by nearly a third in its French arm, while its bottom line was also knocked by costs of its revamp, range overhauls and higher labour costs.
Sales fell 2.5% on a likefor-like basis across its DIY chain B&Q in the UK and Ireland after a mixed performance, impacted by poor weather at the start of the year and boosted by the heatwave in the final quarter. Comparable sales of weather-related ranges jumped by 4.9%, while sales of other products – including more big-ticket items in its showroom – dropped 5.4%.
Kingfisher chief executive Veronique Laury insisted the group was making “good progress”, having reached the halfway point in its five-year strategy overhaul.
Mrs Laury said: “Transformation on this scale is tough and there are challenges that we’re working through.
“There is still much to do to ... remove inefficiencies within the business as we continue to transform at pace.”
Difficult retail trading conditions were “making our task more difficult than expected”, she added.
The group said there was evidence of UK consumer “belt-tightening”, while Brexit uncertainty in Britain’s property market was hitting demand for DIY products.
B&Q’s turnaround has seen it shut 65 shops and slash around 3,000 jobs in the UK and Ireland over the past two-and-a-half years.
The chain has also been shaking up its ranges and improving its online offering, while it recently announced it was investing £100m as part of plans to lower everyday prices.
Kingfisher has nearly 24,700 staff in the UK and Ireland and more than 63,900 overall.
The group has 296 B&Q stores and 598 Screwfix outlets throughout the UK and Ireland. Sterling endured another rollercoaster session yesterday, jumping after higher than forecast inflation and then plummeting on renewed Brexit fears.
The pound was trading flat at $1.315 at the London close, having at one point surged to its highest level since July when it touched 1.321.
It was buoyed by inflation growing more than expected last month as higher price tags for transport, theatre tickets and autumn clothing raised pressure on household finances.
Figures from the Office for National Statistics showed the Consumer Prices Index rose to 2.7% in August, compared to 2.5% in July.
Versus the euro, the pound was also flat at 1.126 euro.
The FTSE 100 closed up 30.89 points, or 0.42% at 7,331.12 as traders moved on from the USChina trade war.
Tesco closed marginally up, rising 0.7p to 235.8p, after the retail titan unveiled its new discount store format, Jack’s, as it tries to take the fight to German discounters Aldi and Lidl.
Rival Sainsbury’s closed down 3.8p at 316.9p after the UK’s competition watchdog launched the second stage of a probe into its proposed merger with Asda.
B&Q owner Kingfisher fell 6.3%, or 16.6p to £2.47 after profits were hit by woes in its French arm.
“Transformation on this scale is tough and there are challenges”