Kingfisher sales and profits up in first quarter as warm weather drives demand

Kingfisher group retail profits surged 20.3% to £142m in the 13 weeks to May 3, which included its critical Easter trading period. Like-for-likes jumped 6.1% and total sales also rose 6.1% to £2.78bn.

In its UK and Ireland arm, comprising B&Q and Screwfix, total sales increased by 12.5% to £1.2 bn, and like-for-likes were up 10.1%, driven by a later Easter, “much better weather compared to Q1 last year and some encouraging signs in both the underlying retail and smaller tradesman market”.

Retail profit in the UK and Ireland was up 35.2% to £68m. However gross margins were down around 200 basis points “reflecting higher sales of lower-margin outdoor seasonal and building products, the recognition of more promotionally-led showroom sales from Q4 last year and increased home delivery costs”.

Total UK & Ireland cash gross profit grew by 7% over the quarter. “Tight cost control continued, despite higher levels of variable pay, together with some favourable cost phasing which will reverse later in the year,” Kingfisher said.

B&Q UK & Ireland’s total sales grew by 10.5% to £1.01bn while like-for-likes increased 9.7%. Sales of outdoor seasonal and building products, which can represent up to 30% of total sales in the quarter, were up around 30%. Sales of indoor products were up around 3%.

At its tradesman-focused business Screwfix, total sales increased 24.2% to £192m. Like-for-likes were up 12% as it benefited from a “strong promotional programme, the continued roll-out of new outlets and the continued success of the mobile ‘click, pay & collect’ offer”.

Kingfisher chief executive Sir Ian Cheshire said: “We have made a strong start to the year, capitalising on more favourable weather conditions right across Europe to achieve sales and profit growth in France, the UK and Poland, our three largest markets. Whilst this is encouraging, the first quarter is one of our smallest and the growth achieved largely reflects comparisons with the very difficult start to last year. We will annualise stronger figures in our second quarter and so, as ever, we will look at the whole of the first half results to properly assess our underlying performance.

“Our ‘Creating the Leader’ programme continues to progress well. We have also made a good start with our key corporate priorities this year, having completed the sale of our stake in Hornbach, entered exclusive negotiations to acquire Mr Bricolage in France, opened our first store in Portugal and started to return surplus capital to shareholders. Furthermore, our self-help initiatives continue to underpin our results and as we enter the key summer trading period our focus remains on driving cash margin, managing costs tightly and delivering shareholder returns.”

The retailer received proceeds of €236m (£192m) following the disposal of its 21% stake in German DIY retailer Hornbach in March 2014. It said it is in “continued exclusive negotiations” to acquire French rival Mr Bricolage in France.

This week it also opened its first store in Portugal under the Brico Dépôt banner.

In its French business, where it operates Castorama and Brico Dépôt, better weather drove a sales uplift of 3.3% to £1.08bn, and a like-for-like rise of 1.6%. Retail profits increased 9.8% to £70m in the quarter.

Sales in its ‘other international’ arm, comprising Poland, Russia, China, Turkey, Romania and Spain, were up 15.4% to £506m, and like-for-likes rose 6.8%, driven by strong performances in Poland and Russia. Retail profit for the division was flat at £4m.