B&Q owner Kingfisher profits slide as French market struggles
B&Q and Screwifx owner Kingfisher has reported a decline in sales, primarily attributed to sluggish consumer demand in its French market.
B&Q and Screwifx owner Kingfisher has reported a decline in sales, primarily attributed to sluggish consumer demand in its French market.
For the year ending January 31, the DIY giant saw a 1.5% drop in sales, bringing the total to £12.78bn. This decrease was largely driven by a 6.2% sales decline in France, while performance in the UK and Poland remained stable.
Operating profit for Kingfisher fell 29.7% to £407m, with pre-tax profit down 35.4% to £307m.
The company also saw a 7% fall in annual profit, reflecting weak demand for more discretionary “big-ticket” items.
Despite the challenges, the group reported cost savings of £120m for the year. However, these savings were offset by £90m in cost inflation driven by higher wages, increased employer national insurance contributions, and additional fees from the UK government’s packaging regulations under the Extended Producer Responsibility scheme.
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Addressing the pressures of weak consumer spending and rising operational costs, Kingfisher CEO Thierry Garnier remained optimistic, noting that the company was “in its best operational shape for years.”
“For the first time in over six years, we grew our market share in all key regions. We delivered profit and free cash flow in line with or ahead of our initial guidance, with strong delivery against our strategic objectives,” Garnier said.
Kingfisher also reported positive growth in “big-ticket” categories in the UK and Poland during the fourth quarter, after a period of subdued home renovation activity in the UK. Wickes, in its annual results, observed a similar uptick in sales during this period.
Looking ahead, Kingfisher remains cautious, citing the potential impact of recent government budget announcements in both the UK and France, which have raised costs for retailers and dampened consumer sentiment in the short term.
“We remain focused on what is in our control – progressing our strategic objectives at pace to deliver further market share gains, and continuing to manage gross margin, costs and cash effectively,” Garnier concluded.
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