B&Q owner’s shares slump as DIY chain fails to benefit from Homebase’s troubles

Group blames 'weak consumer backdrop' as results fail to meet expectations

Ben Chapman
Thursday 16 August 2018 18:02 BST
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Kingfisher, which owns Screwfix and B&Q has benefited from a temporary boost from hot weather but underlying sales disappointed investors
Kingfisher, which owns Screwfix and B&Q has benefited from a temporary boost from hot weather but underlying sales disappointed investors

Shares in B&Q owner Kingfisher fell 4.8 per cent on Thursday after the DIY chain’s results showed little benefit from troubles at rival Homebase.

Group like-for-like sales rose 1.6 per cent to £3.26bn for the second quarter, and in the UK were up 4.2 per cent across the UK and Ireland, but the figures disguised deteriorating underlying performance.

After stripping out the effects of a summer heatwave that has seen shoppers spend big on barbecues and garden furniture, sales continued to fall thanks to a “weak consumer backdrop”.

The group’s French DIY chain Castorama saw like-for-like sales drop by 3.8 per cent over the period.

Chief executive Veronique Laury said: “We started our transformation two-and-a-half years ago and are on track to deliver our strategic milestones for the third year in a row.

“In the second quarter, I'm pleased that we grew our sales after the exceptionally harsh weather conditions in the first quarter.”

B&Q’s revenues fell 8.8 per cent in the first three months of the year as the Beast from the East hit retail sales across the UK.

The latest results come just days after rival Homebase announced plans to close 42 of its stores, with the likely loss of 1,500 jobs. Homebase had been struggling for months under the management of Australian firm Wesfarmers

Kingfisher’s disappointing numbers are yet more evidence that the nation’s obsession with DIY is on the wane, said George Salmon, equity analyst at hargreaves Lansdown.

“At first glance, UK results represent a marked improvement,” he said.

“However, the strong sales figures are more a function of a scorching summer than any underlying progress.

“Strip out the impact of summer items like barbeques and garden furniture, and sales, which headed south over the winter, have continued to fall. That’s quashed any hopes that B&Q would benefit from the recent problems at Homebase.

“With the French retail-facing business also selling less than this time last year, there’s not much encouragement from the other side of the Channel either.

“There are a few crumbs of comfort though. Trade-focused operations Brico Dépôt and Screwfix continue to pull in more business, while management is confident margins will improve this year. But with profitability actually falling over the half, the pressure’s on the group to deliver from here on.”

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