Kingfisher turnaround ‘on track’ despite drop in profits
THE OWNER of DIY chain B&Q revealed a fall in half-year profits, but insisted its turnaround was on track and unveiled plans to ramp up expansion of its Screwfix building supplies arm.
Kingfisher posted a 2.3 per cent fall in underlying pre-tax profits to £384m for the six months to August 1 as it took a currency hit.
Like-for-like store sales at B&Q rose 0.7 per cent after a disappointing performance for outdoor seasonal goods in the peak summer season.
Its trade-focused Screwfix business saw like-for-like sales increase 16.5 per cent thanks to a buoyant housebuilding sector.
Recently appointed chief executive Veronique Laury, who took over from Sir Ian Cheshire in December, now aims to add nearly 200 outlets to the Screwfix chain, boosting it from 412 to around 600 as part of a group-wide overhaul.
But she has already announced some “sharp” decisions affecting the B&Q business, including closing as many as 60 B&Q stores over the next two years, affecting around 3,000 jobs in the UK and Ireland.
Other plans include cutting back on some of the 393,000 products sold across the company, particularly as only 7,000 items – amounting to seven per cent of sales – are sold in at least two of Kingfisher’s operating companies.
Ms Laury said the group had been working “at pace” on the revamp.
She said: “I am pleased that we have delivered a solid first half of the year and have made good early progress with our ‘One’ Kingfisher plan.
“There remains a lot to be done however.”
Ms Laury denied rumours the group might axe the B&Q brand, confirming there were no plans currently to change the chain’s name.
The group also revealed its expected bill from the introduction of the living wage in April, saying it will cost the group around £5m next year.
A raft of retailers have recently warned over the impact of the move, which will see workers aged 25 and over paid £7.20 an hour from next April, rising to £9 from 2020.
Next and Whitbread last week cautioned they may need to hike prices to offset the higher wage bills from the living wage.
But Kingfisher said the cost to the group would not be “so significant” as a large part of its business is based outside the UK.
I am pleased that we have delivered a solid first half of the year. Veronique Laury, chief executive
of Kingfisher