Kingfisher guidance unchanged despite profits and sales slump

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Home and DIY giant Kingfisher has insisted that its full year guidance remains unchaged despite profits and sales falling in the first half.

For the six months to July 31, 2022, the owner of B&Q and Screwfix reported a 4.1% fall in group sales to £6.8bn, while gross profits slipped 7.4% to £2.4bn. Statutory pre-tax profits slumped 30% to £474m, and operating profit fell 29.1% to £531m.

Thierry Garnier, CEO of Kingfisher

Thierry Garnier said ‘the business and our balance sheet are in a strong position’

Gross margin fell 130bps to 36.7%, net cash decreased to £329m and statutory basic earnings per share slipped 29.8% to 18.6p.

Despite this, Kingfisher said its performance in the first half had been in line with expectations, with sales 16.6% ahead of pre-pandemic levels and group sales in quarter two ahead of quarter one.

The retailer, which also owns Brico Depot in mainland Europe, said it had also had a strong start to second-half trading. Sales in the three months to September 17 were up 15.2% on a three-year basis, with one-year like for likes down 0.7%.

Combined with the performance in the first half, Kingfisher said trading was in line with the £770m adjusted pre-tax profit guidance it issued at the start of the year.

It said it would focus on investing in long-term growth, expanding its in-store picking ecommerce model, expanding its own-brand exclusivity and rightsizing its store estate.

Chief executive Thierry Garnier said: “Kingfisher has delivered a very resilient first half of sales. While facing very strong comparatives from the prior year as well as a more challenging environment, like-for-like sales were 16.6% ahead of pre-pandemic levels with a sequential improvement from Q1 to Q2. This was driven by the extension of share gains in all our key markets, reflecting the successful execution of our strategy, and resilient sales from both DIY and trade customers. We are now back to pre-pandemic levels for in-store product availability and maintaining competitive pricing across our banners.

“Looking to the months ahead, although trading in the year to date has been in line with our expectations, we remain vigilant against the more uncertain economic outlook for the second half. We are therefore focused on delivering value to our customers at a time when they need it most. You can expect continued strong execution, with a focus on growing sales and market share, effective management of our gross margin, and alignment of our costs and inventories to market conditions.

“With the business and our balance sheet in a strong position, we continue to invest in opportunities to drive growth. B&Q successfully launched its first home improvement marketplace during the period, and we are now preparing for marketplace launches in France, Poland and Iberia.

“We are also continuing to invest in the trade segment through Screwfix’s expansion in the UK and Ireland, as well as the further development of our offer for tradespeople across our banners, building on the success of TradePoint. We are on course to open our first Screwfix stores in France within a few weeks. We are developing innovative new products and services to support more sustainable and energy-efficient homes, which will benefit our customers and the environment.

“These investments, together with the proven resilience of the home improvement sector, our balanced exposure to DIY and trade, and our strong and consistent execution, support our confidence in continuing to grow ahead of our markets.”