Shares in Kingfisher, owner of DIY chain B&Q, tumbled yesterday after reporting a slide in annual profits and flagging an “uncertain” economic outlook.
Kingfisher said B&Q’s same‑floorspace sales slid 5 per cent in the final three months of its financial year to end-January amid falling demand for “big ticket” ranges such as kitchens.
That quarter came against the backcloth of the Bank of England raising interest rates last November – the first rise in a decade.
Kingfisher, whose better-performing trade-focused Screwfix arm saw sales growth slow to 7 per cent in the quarter, posted a 10 per cent drop in annual pre-tax profits to £682 million. However, underlying profits, stripping out exceptional items, edged up 1.3 per cent to £797m.
On prospects, company chief executive Veronique Laury said: “The outlook for our main markets is mixed. The UK is more uncertain, France is encouraging yet volatile, whilst the market in Poland remains supportive.”
On the stock market, the shares fell 10.7 per cent to 301.6p. Kingfisher said over the full year B&Q’s like-for-like sales sank 2.8 per cent, more than counterbalanced by sales jumping 10 per cent at Screwfix.
The group said that its overall UK and Ireland annual like-for-like sales rose 0.6 per cent, boosted by price inflation.
But Kingfisher said “business disruption” knocked 1.5 per cent off its group-wide like-for-like sales amid stock availability problems.
Laury acknowledged the “mixed” performance last year, two years into a major group restructuring she introduced. She said “solid growth” at Screwfix and in the Polish market had been offset by continued weaker sales in France and the business disruption.
“We are acting on the causes of this disruption, however,” the chief executive added. B&Q is in the middle of an overhaul, which has seen it shut 65 shops and slash around 3,000 jobs in the UK and Ireland over the last two years. Richard Hunter, head of markets at Interactive Investor, commented: “Kingfisher’s performance varies by both business and region, leading to a very mixed overall result as the group continues its transformation plan.
“As has become expected, Screwfix made a strong contribution to progress, whilst the Polish unit has also improved. Overall group sales are up, cost savings are falling out of the turnaround plan and the fact that Digital now accounts for half of the group’s sales positions the company well in the rapidly changing technology environment.”
Hunter added that Kingfisher’s continuing share buyback programme will remain “supportive”, and the 4 per cent increase in the full-year dividend to 10.8p was a sign of management confidence in the overall outlook. Taken together, the return to shareholders last year was worth £491m.
However, Hunter added the caveat that it was clear “a number of wrinkles still need to be ironed out” at the business, with both the French and UK markets – vital for Kingfisher – remaining tough.
In addition, gross profit margins – before tax – had fallen, and the group’s outlook statement was “extremely guarded”.