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Kingfisher takes massive hit to profits from stagnating demand

Slowdown: Screwfix owner Kingfisher revealed retail profits fell 27.7% year-on-year to £555m for the first six months to July 31

Kingfisher profits plunge as owners of Screwfix and B&Q battle sluggish demand and economic uncertainty

  • Kingfisher revealed retail profits fell 27.7% year-on-year to £555m
  • Online revenue declined due to lack of in-store trade restrictions
  • Profits in the UK and Ireland were further hit by rising utility prices

Kingfisher saw half-year profits slump as the Covid-induced boom in DIY goods fades and the cost-of-living crisis hits consumer spending.

The B&Q and Screwfix owner’s retail profits fell 27.7% year-on-year to £555million for the first six months to July 31, although it was still over £100million sterling above pre-pandemic levels.

A strong comparative performance in the British Isles over the previous year was mainly blamed by the business on lower profits, although heightened economic uncertainty also impacted the renovation sector home.

Slowdown: Screwfix owner Kingfisher revealed retail profits fell 27.7% year-on-year to £555m for the first six months to July 31

Slowdown: Screwfix owner Kingfisher revealed retail profits fell 27.7% year-on-year to £555m for the first six months to July 31

Profits in the UK and Ireland were further hurt by costs associated with the opening of 88 new stores, higher electricity and gas prices and stronger demand for low-energy products. margin.

Overall reported like-for-like sales were still down just 4.1% to £6.81bn, which was in line with analysts’ expectations, although online revenue fell due to the absence of in-store trade restrictions.

Kingfisher saw strong growth in Poland, where its Castorama outlets were unaffected by forced closures, while the UK heatwave in July boosted orders for B&Q cooling products.

Even as commerce weakened, the company’s revenue grew 16.6% year-over-year on growth in all markets and soaring e-commerce revenue of 156, 3%.

The London-based group said sales since the start of August had been “encouraging”, buoyed by growing interest in outdoor items and “big tickets”.

He added that inflationary pressures have eased with falling prices for metals and plastics, while ocean freight rates have fallen since January.

However, Kingfisher warned that cost pressures are likely to continue through the second half due to a lag between ordering products and selling them.

Chief Executive Thierry Garnier said: “We remain vigilant in the face of a more uncertain economic outlook for the second half of the year. We are therefore focused on creating value for our customers when they need it most.

The slowdown marks a radical break from the first half of the pandemic era, when the rise of homeworking encouraged people with extra savings across Europe to spruce up their properties.

Kingfisher has emerged as one of the retail sector’s biggest winners from the pandemic, alongside fellow home improvement firms Wickes and Travis Perkins, both of which recently reported weaker demand in their half-year results.

Adam Vettese, analyst at investment platform eToro, said: “If Kingfisher’s results hold up, the pandemic-fueled DIY boom is well and truly over.”

“While CEO Thierry Garnier talks about ‘resilient’ performance, the reality is that most investors will focus on the fact that many of his key metrics are significantly lower than they were this time last year. last.”

He added: “The problem for all retailers, including Kingfisher, is that they are not only encumbered by the higher cost of goods, but also their customers, which means they are likely to spend less up to until the economic situation improves.”

Kingfisher shares were down 3.5% at 238.6p by mid-morning on Tuesday, meaning their value has fallen by around a third in the past 12 months.

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