B&Q owner Kingfisher warns of big drop in annual profits

B&Q owner Kingfisher has revealed annual profits slumped by more than a quarter and warned over another steep fall in earnings this year as it overhauls its French arm to help revive its fortunes.

The group reported a 25.1 per cent drop in underlying pre-tax profits to £568m for the year to January 31.

Kingfisher, which owns the Screwfix chain and brands including Castorama and Brico Depot in France, said like-for-like sales tumbled by 5.9 per cent in France and 7.7 per cent elsewhere across Europe.

It said the UK and Ireland saw a more resilient performance, with sales up 0.8 per cent, leaving overall group-wide sales down 3.1 per cent.

The group has pared back sales declines so far in its new financial year, to a fall of 2.3 per cent.

But it warned that profits are expected to drop again, to between £490m and £550m in 2024-25, below the £560m pencilled in by analysts.

It comes after the firm had already warned over profits twice for the year just gone since last autumn.

Kingfisher announced a turnaround plan for its beleaguered

French arm, including a store restructuring and shop revamp plan, to help boost its flagging performance in the region.

It said it was a “clear plan to take France to the next level” and “significantly improve the performance and profitability of Castorama”, with plans to cut the space of some stores, having identified around a third of the 95-strong chain as being the lowest performing.

But in the UK, it is planning to open up to 40 new Screwfix stores in the year to next January, while it is also expanding the chain across

France and opening stores under the Castorama brand in Poland.

Thierry Garnier, chief executive of Kingfisher, said: “Despite all the macroeconomic and consumer challenges in our markets over the past year, we have stayed focused on our customers and our long-term strategy.”

He added: “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 home improvement demand. Against this backdrop we will remain agile and focused on what is within our control – leveraging our strategy to deliver market share growth, driving productivity gains, and managing our costs and cash effectively.”

Commenting on the results, Richard Hunter, head of markets at interactive investor, commented: “Some of the sting was taken out of these numbers after two previous profit downgrades, but the results are nonetheless light of many reasons to be cheerful.”