B&Q owner Kingfisher backs DIY to rally despite a plummet in profits
The chief executive of B&Q owner Kingfisher has dismissed the view that the UK DIY market is in long-term decline, as the wet spring weather wiped nearly a third off the chain’s profits.
Ian Cheshire blamed the wettest March in 50 years, pressure on disposable incomes and “aggressive” price discounting for the hit to its bottom line in the first quarter.
It was a similar story at its Castorama DIY chain in Poland and in France, where it operates this and the Brico Depot operation for trade customers.
The consumer downturn and stagnant housing market has seen the UK DIY market shrink by £7 billion since 2008 prompting industry experts to cite a shift towards “do it for me”, as time-pressed customers increasingly hire tradesmen to spruce up their homes.
Cheshire said that £5 billion of this decline was because of lower mortgage equity withdrawals but he hailed slight improvements for household budgets and the property market this year, particularly the re-emergence of first-time buyers.
He said: “It does not feel like the death of the DIY market. There are the first signs that first-time buyers are getting back into the property market. If housing transactions get going again, DIY will get going again.”
Group profits at Kingfisher, which has 1030 stores in eight countries from China to Turkey, tumbled by 28 per cent to £114 million over the quarter to May 4.
This was significantly worse than City expectations. But the impact of the sun coming out could be seen in the group’s like-for-like sales swinging from a fall of 15 per cent in the first week of April to growth of 15 per cent in the final week of the month. Cheshire said: “We will have to keep the faith that the weather will not be as bad as last year.”
Kingfisher UK and Ireland’s retail profits fell by 32.1 per cent to £50 million, dragged down by a 5.6 per cent fall in like-for-like sales at B&Q, which echoed the sales drop in France.
But its 283-store Screwfix operation, which targets trade customers, grew sales by 1.7 per cent.
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