Kingfisher reports profits surge but warns on ‘fragile’ outlook

Group revenue slid 0.9% to £5.45bn, while like-for-likes dropped 1.3%.

Group retail profit grew 15.7% to £402m.

In its UK & Ireland arm profits grew 15.8% to £171m as the B&Q retail profit margin “continued to improve benefiting from margin and cost initiatives”. It also made the  “tactical decision” in the second quarter to “limit the use of general, store wide promotions”.

In the domestic arm revenue declined 2.9% £2.3bn, while like-for-likes dropped 3.7%, as a “declining home improvement market affected by weak consumer demand for bigger ticket home project spending” affected sales.

At B&Q UK & Ireland, total sales were down 3.1% £2.1 bn, and down 3.7% on a like-for-like basis.

Retail profit grew 15.4% to £158m with gross margin percentage “increasing sharply by 140 basis points driven by more direct sourcing, further shrinkage reduction and fewer promotions”.

Its French arm “outperformed the market”, with retail profit up 13.7% to £160m “benefiting from good sales growth and continuing margin initiatives”. Sales grew 2.9% to £2.2bn, while like-for-likes increased 1.4%.

Its ‘Other International’ arm experienced a 21% surge in profits £71m, driven by Spain and Turkey, and a halving of China losses, which “more than offset a slight profit decline in Poland”.

Other International total sales increased by 0.7% to £941m, with like-for-likes dropping 1.4%.

In China, Kingfisher said the “fix-it phase of the turnaround plan is progressing as planned and losses of £12m were almost half that of the previous year”.

The retailer added that group direct sourcing is “running ahead of plan”.

Kingfisher group chief executive Ian Cheshire said: “We have traded well with profit again strongly ahead and financial debt reduced. Our Delivering Value programme of self-help initiatives is working well, meaning Kingfisher now generates significantly higher profits and cash flow from its operations and a much better return on capital for its shareholders.

 “As we have consistently said, the immediate outlook for consumer spending is fragile, particularly in the UK where it is likely to remain challenging for some time. Our continued profit growth will come from our well-established self-help initiatives, including sourcing more products through our global network and vigorously driving operating cost efficiencies.

“At the same time our strong balance sheet and cash flow enables us to continue to invest more this year to grow our business, refresh our stores and introduce new products and services to provide the inspiration and solutions our customers want to help them improve their homes.”