B&Q owner Kingfisher has seen half-year profits tumble after being hit by woes in its French arm and amid consumer belt-tightening in the UK.
Shares in the retailer fell as much as 8% after it posted a 30% fall in statutory pre-tax profit to £281 million for the six months to July 31, with profits down 14.8% on an underlying basis at £375 million.
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 ongoing revamp, range overhauls and higher labour costs.
Sales fell 2.5% on a like-for-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%.
Screwfix like-for-like sales rose 4.5% in the first half.
For the overall UK and Ireland business, retail profits edged 1.2% higher to £281 million.
But it was a 31% tumble in constant currency profits to £122 million at its French arm that weighed on wider group profits in the first half.
Sales at Castorama slumped 5.8% and were 1.7% lower at Brico Depot.
Kingfisher chief executive Veronique Laury insisted the group was making “good progress” having reached the halfway point in its five-year strategy overhaul.
She said: “Transformation on this scale is tough, and there are challenges that we’re working through.
“There is still much to do to improve our performance in France and to remove inefficiencies within the business as we continue to transform at pace.”
She added the difficult retail trading conditions are “making our task more difficult than expected”.
In the UK, the group said there was evidence of consumer “belt-tightening”, while Brexit uncertainty was also holding back the property market, which has a knock-on effect on demand for DIY products.
Neil Wilson, chief market analyst at Markets.com, said investors remained unconvinced by Kingfisher’s revamp.
He said: “It’s still the same old story at Kingfisher with little sign that the turnaround is really working.
“With talk of activist investors circling, the French operation is one that could certainly be earmarked for hiving off, as previously argued on several occasions in the past.”
B&Q’s turnaround saw it shut 65 shops and slash around 3,000 jobs in the UK and Ireland over the last two-and-a-half years.
It has also been shaking up its ranges and improving its online offering, while the group recently announced it was investing £100 million 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, with operations also across markets including Poland, Russia, Romania and Iberia.
It has 296 B&Q stores and 598 Screwfix outlets in the UK and Ireland.
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here