Kingfisher pre-tax profits slip as 'strong' UK earnings offset by currency volatility

• UK & Ireland retail profit up 16.8%
• B&Q like-for-likes edge up 0.7%, 26 leases of the 60 planned store closures have been exited
• Screwfix like-for-likes rocket 16.5%, new plans to expand from 400 stores to 600 in UK
• Group wide IT programme accelerated

Kingfisher adjusted pre-tax profit fell from £393m to £384m as the DIY giant was hit by £29m of adverse foreign exchange movements, which have impacted a raft of retailers in recent months,

However, retail profit in constant currencies was up 5%, driven by a “strong” performance in the UK & Ireland where earnings surged 16.8%. Retail profit dropped 5.7% in its key France market, but increased 3% in its ‘other international’ arm including Poland and Russia.

In the half year to August 1, group like-for-likes rose 2%.

Total group adjusted sales in constant currencies increased 3.5%; UK & Ireland advanced 4.6%, France edged up 1.1% and other international was up 5.7%.

The retailer has exited 26 leases of the 60 B&Q stores it plans to offload as it aims to realign its property portfolio with changing shopping habits.

Screwfix expansion

But Kingfisher sees scope to further expand its flourishing Screwfix arm, and said there is potential for a further 200 UK stores. It operates 412 at present.

Kingfisher is also accelerating its group-wide IT overhaul after a successful pilot in Ireland. The retailer plans to complete roll out by 2018/19, earlier than the planned 2020/21. B&Q and Castorama France will be first, in 2016.

Kingfisher UK & Ireland like-for-likes increased 3.3% while revenue increased 4.6% to £2.53bn as the “stronger UK economy and a more buoyant housing construction market” buoyed sales.

Retail profit grew by 16.8% to £194m. Gross margins were flat and cost control was “tight”, driven by ongoing productivity initiatives at B&Q including “store friendly deliveries” that make it quicker and easier for store staff to replenish and roller checkouts, “improving customer experience as well as scanning and database accuracy”.

At B&Q, like-for-likes edged up 0.7%. Turnover was flat at £2.03bn. Sales of outdoor seasonal products fell 2.3% and showroom products dropped 2.4%. 

Screwfix like-for-likes rocketed 16.5% and revenues climbed 27.9% to £494m driven by specialist plumbing and electricians trade desks, strong digital and mobile growth and new and extended ranges.

French results

Kingfisher France, where the group makes more than half its annual profit, reported like-for-likes down 0.3% and revenues up 1.1% to £1.98bn. Kingfisher said it was hit by “ongoing weak consumer confidence and a declining housing and construction market”.  

The retailer has also hired former Morrisons director Emily Lawson as its chief people officer to complete its seven person leadership team. Lawson will join the business in October and her appointment means four out of seven of the executive board at the DIY group are women.

Kingfisher’s chief executive Véronique Laury was appointed this year, when she unveiled her new ‘One Kingfisher’ strategy, which is designed to “leverage the scale of the business by becoming a single unified company where customer needs come first”.

Today Laury said: “I am pleased that we have delivered a solid first half of the year and have made good early progress with our ‘One Kingfisher’ plan. This plan will unlock our potential through organising ourselves very differently in order to create a single, unified company where customer needs come first.”

She added: “There remains a lot to be done however.”

One key plank of Laury’s plan includes further unifying the group’s product ranges. She believes the number of SKUs and suppliers can be “significantly reduced”. The group sells 338 battery SKUs across nine operating companies, for example, and under the new regime it plans to slim that down to 36 SKUs across the group.