B&Q owner Kingfisher reports weak demand for kitchens and bathrooms
The chief executive of Kingfisher, which owns the B&Q and Screwfix chains, has said demand for kitchens and bathrooms in the UK has plateaued but overall sales are showing signs of recovery, as the retail group reported sliding half-year revenues.
Thierry Garnier said demand for big-ticket categories had remained weak, in line with the wider market, while sales of seasonal products – from garden furniture to barbecues – had improved since early July.
He noted that housing transactions were picking up in the UK, but said it usually took between nine and 12 months for customers to start buying larger items to fit out their new homes.
“The trend in kitchens is tough,” he said. People are buying fewer kitchens, and cheaper versions. “The market is slightly better in bathrooms.”
Sales of seasonal items were “poor” between April and early July but strong in July and August, when more consumers splashed out on outdoor furniture, barbecues, fencing and decking, air conditioning and cooling systems, Garnier said. Overall, “we are seeing positive early signs of market recovery, notably in the UK”, he said.
Shares in the FTSE 100-listed company rose by 6.7% on Tuesday morning, after Kingfisher tweaked its fullyear forecast for adjusted pre-tax profits to between £510m and £550m, from £490m to £550m previously.
Comparable sales, at outlets open at least a year, fell by 2.4% to £6.8bn in the six months to 31 July. Statutory pretax profit rose by 2.3% to £324m. In the second quarter, sales dropped by 3.8%, while in the third quarter so far they are down by 0.3%.
Half-year comparable sales slipped by 0.2% in the UK and Ireland and by 7.2% in France, where the company runs the Castorama and Brico Dépôt chains and consumer sentiment is slowly recovering from a 50-year low recorded last year, amid political uncertainty. The new French prime minister, Michel Barnier, is negotiating with potential ministers as he struggles to form a government to end the country’s political deadlock.
Kingfisher has launched a new Screwfix City format and opened six of these smaller stores across London, with plans to open 100 on high streets around the UK and Ireland in the next few years. It is considering opening stores in Edinburgh, Bristol and Dublin. “A smaller format will be a bigger part of the future,” Garnier said.
The company also operates in Poland, Romania Spain and Portugal under the Castorama or Brico Dépôt brands, and trades as Koçtaş in Turkey.
Asked about Labour’s plans to improve workers’ rights, Garnier said the business was “comfortable with the direction of travel”, adding that it pays above the real living wage.
Kingfisher has adopted flexible working, with office-based employees attending its headquarters in Paddington, west London, two or three days a week.