Kingfisher was one of the pandemic’s winners. The company’s sales grew as people spruced up the homes they were confined to over an 18-month period.
Unfortunately for Kingfisher, we are now in a very different world, and sales are suffering. Its B&Q and Screwfix outlets are at the mercy of higher interest rates, rising commodity prices and general consumer concerns. That said, UK & Ireland sales grew 2.7% with Screwfix doing a lot of the heavy lifting.
Investors may take some positives from the company maintaining profit guidance, but today’s results are very difficult to get excited about.
Q1 group sales slipped 0.3% on a reported basis and 0.9% on a like-for-like constant currency basis. Sales fell 8.1% in France, but this was partially offset by strength in the rest of Europe, where sales grew 7% from a much lower base.
Kingfisher shares were down 0.9% at the time of writing.
“It’s a much tougher market these days for Kingfisher in comparison to the pandemic DIY boom,” said Adam Vettese, analyst at investment platform eToro.
“The Screwfix and B&Q parent company reaped the benefits of consumers stuck at home with a few extra pounds in their pocket and now we have the opposite in that people are returning to the office and feeling the pinch in terms of cost of living. Full year profit outlook has been maintained so it may not be time to panic just yet but there are indications of tougher trading conditions in other key markets such as France.
“As the macroeconomic situation begins to ease and consumers start to see some relief in terms of high interest rates and high inflation, conditions should start to improve for retailers such as Kingfisher as a home improvement budget is back on the table for many households.”