Why Kingfisher’s CEO is ‘bullish’ about 2025, despite cost headwinds

Kingfisher boss Thierry Garnier is feeling relatively optimistic about the year ahead, despite the DIY giant posting a 35% drop in pre-tax profits.

The retail group, which owns B&Q and Screwfix, saw its profits plunge to £307m in the year to 31 January as like-for-like sales slipped 1.7% to £12.8bn.

However, in the UK and Ireland, retail profits edged up 0.6% to £558m as sales across the two retail chains cumulatively rose 1.2% to £6.5bn on a constant currency basis.

Garnier notes it “has been another year of strong strategic delivery for Kingfisher against a challenging macroeconomic and consumer backdrop”.

The chief executive is predicting another year of operational resilience as he shares that Kingfisher is looking to fully offset £145m in additional costs arising from tax changes in the UK and France through savings in its supply chain and store operations.

“We are relatively bullish on the action we can do, but at this point of the year, we prefer to be relatively cautious on the market,” he says.

But how does Kingfisher plan to deliver cost-savings alongside the pursuit of new growth opportunities in the year ahead – and can B&Q and Screwfix continue drive sales momentum in the meantime?

Green shoots at the end of the year

Garnier has been vocal that the challenging macroeconomic and consumer backdrop has weighed on the group’s bottom line in the past year.

However, green shoots started to appear at the end of the financial period, with the chief executive saying he was “very pleased” with the group’s fourth quarter performance.

B&Q’s like-for-like sales rose 1.3% over the Christmas period after two consecutive quarters of declining sales prior.

Garnier noted the group saw “good big ticket sales in the UK in Q4”, with kitchen and bathroom sales “both positive” over the final quarter.

Looking ahead, he adds that the DIY chain also has “a lot of orders that have not been realized through sales for kitchen and bathroom” filtering through into the start of the new year.

The chief executive is confident the early signs of recovery among consumer sentiment will continue into the new year, adding he also expects B&Q to recorded “a small benefit” from the collapse and closure of Homebase stores late last year.

“We are seeing a pretty resilient consumer in the UK,” he says, adding it provides “some reason to hope for a bit more optimism this year”.

Offsetting £145m in costs

Alongside it’s financial results, Kingfisher said that it plans to “fully offset” the £145m in additional costs it faces across its operations in the UK and France.

It estimates changes to UK employer national insurance contributions will add an extra £31m to its wage bill, operating costs will increase £90m and the impact of new packaging fees regulations in the UK will cost the business an extra £10m.

“We are saying today that we will mitigate entirely this £145m largely through cost savings we have,” says Garnier. This commitment by the business follows the £120m in added costs that it offset during its most recent financial year.

Part of Kingfisher’s efforts to reduce costs include “reducing the size or the number of our DC’s in France, the UK and Poland”, renegotiating store leases and adding more self checkouts on the shop floor.

“There are many ways to be more efficient without impacting people,” says Garnier, adding that retail staff previously working on the tills will be relocated elsewhere in the store, such as to supporting with bathroom and kitchen sales.

Kingfisher chief financial officer Bhavesh Mistry explains the business is also making “better use of the store whilst using less DC space and better serving our customers overall”.

This includes specialist areas for B&Q’s Trade Point customers and sectioned off areas to house stock for click-and-collect customers.

Mistry shares the retailer is also keep to ship orders from its store network to drive further cost savings.

New store openings

Store expansion forms part of Kingfisher’s growth ambitions for the year, with the business planning to open 35 more Screwfix stores across the UK and Ireland by the end of January 2026.

“We opened seven Screwfix City stores during the year, taking the total to 19 stores and bringing greater convenience to our customers in cities,” says Garnier

“We are very happy with the results and plan to open up to 30 more in the coming year, creating more than 400 jobs,” he notes.

The group will also complete the conversion of the eight Homebase stores it acquired at the start of the year to its B&Q banner, creating roughly 200 new jobs.

The business snapped up five of its rivals’ empty units in the UK and three in the Republic of Ireland for a collective sum of £5.7m following the retailer’s collapse last November.

The future is digital

Kingfisher’s ecommerce sales jumped 8.3% in the year, which Garnier notes was “driven by our focus on bringing customers more speed convenience and choice”.

This sales uplift was bolstered by both Screwfix and B&Q banners launching on Deliveroo, offering delivery of thousands of products to customers in London.

Garnier adds the group is “seeing strong momentum across all our banners” on its marketplace proposition. B&Q, which was the first of Kingfisher’s banners to launch an expanded online proposition, has since grown to over 2.1 million products and represents 43% of online sales.

The chief executive adds that the business is “benefiting from a better margin on the marketplace” to offset the weaker in-store demand.

“We’re investing in AI, in data, in robotization,” Garnier adds. The group’s use of artificial intelligence on online product recommendations contributed to £100m in sales last year.

Meanwhile, Kingfisher’s Hello Casto AI assistant for its French division makes up 10% of Castorama’s total ecommerce sales. It’s planning on rolling out the chat bot to B&Q  in the near future.

Garnier is not oblivious to the fact that macroeconomic uncertainty will weigh on consumer confidence in the coming months, but early signs from a more positive final quarter and continued progress against the company’s strategic priorities has the chief executive feeling more confident in the year ahead.

“We believe the market will stay resilient this year, and we plan to gain market share, and again, we believe will have some positive impact from Homebase in the year,” Garnier concludes.

Despite significant cost headwinds Garnier is cautiously optimistic that Kingfisher can weather the year ahead, bolstered by store expansion and supply chain efficiencies.

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