B&Q owner issues another profit warning after weak sales in France
The owner of B&Q and Screwfix has issued its second profit warning in three months as sales fell almost 4% in its financial third quarter.
Kingfisher, which also owns Castorama and Brico Depot in France and also operates in Poland, Iberia and Romania, reduced its profit forecast from £590m to £560m for its financial year to the end of January.
The company, which in September downgraded full year pre-tax from a forecast of £634m, made £758m in profits in its 2022-2023 financial year. Kingfisher shares fell 6% on Wednesday morning, making it the top faller on the FTSE 100.
The London-based group blamed continuing weakness in its French business, where weak DIY sales were exacerbated by a late start to the heating and insulation season because of warmer weather, which resulted in total sales plunging 8.6% to £1bn in the three months to 31 October.
In the UK, which also includes the Tradepoint chain, Kingfisher grew like for-like sales by 1.1% to £1.6bn.
The company said B&Q’s UK e-commerce sales grew 32% year on year in the quarter.
“Our UK banners performed well in the third quarter with B&Q, TradePoint and Screwfix growing sales and market share,” said Thierry Garnier, the chief executive of Kingfisher. “Reflecting the weakness of the French market, and notwithstanding our proactive cost actions, we have lowered our group profit guidance for the full year.”
Garnier said that moving into the new year the company would focus on growing its share in its biggest markets and making productivity gains to offset wage inflation.
“We expect to see some product cost price inflation, albeit at a significantly lower level [than seen to date], and expect rational retail pricing and competitive price indices at all our banners,” he said. “On the medium-to-longer-term outlook, we remain very positive for home improvement growth in our markets, and our ability to grow ahead of our markets.”
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The company said that in the final quarter of trading for its current financial year, group like-for-like sales were down 3.4% year on year in the three weeks to 18 November, with the UK continuing to prove “resilient” while the French market remained weak.
Richard Lim, the chief executive of Retail Economics, said: “These figures show challenging conditions facing the retailer, with a mixed picture emerging across Europe. The UK appears more resilient than other territories but sales remain soft against the backdrop of rising interest rates, weak consumer confidence, and a faltering housing market.
“All the signs point towards conditions getting tougher before we see signs of improvement. Inflation is on a steep trajectory downwards with a sustainable rise in spending power in sight. But the sector is heavily dependent on a buoyant housing market, which remains under intense pressure given the outlook for interest rates.”