Kingfisher sales affected by ‘unusually poor’ weather and strikes in France
Kingfisher earnings suffer from ‘unusually bad’ weather as Screwfix owner hit by pension reform strikes in France
- Kingfisher has been one of the most prominent retail sales gains in the pandemic era
- Like-for-like sales from seasonal categories fell 11.3% in the first quarter
- Sales in France were also hit by protests against controversial pension reforms
B&Q owner Kingfisher blames bad weather for disappointing seasonal product purchases in the first quarter of the fiscal year.
The FTSE 100 firm reported an 11.3 percent drop in like-for-like seasonal category revenue for the three months ended April, as well as a 1.2 percent drop in sales of big-ticket and core items .
Chief executive Thierry Garnier said trade in the British Isles and France was affected by the “unusually bad spring weather”, which hampered demand for garden and outdoor products.
Bad days: Kingfisher blamed ‘unusually bad spring weather’ for causing seasonal category comparable earnings to fall 11.3 percent in Q1
Sales in France were further affected by mass protests against President Emmanuel Macron’s controversial pension reforms, which hurt footfall at the company’s Brico Depot stores.
Sales also declined in Poland’s third-largest territory due to strong comparative performance and rising inflation rates.
But Kingfisher’s total reported sales were still marginally up, with UK and Ireland operations supported by massive customer demand at Screwfix.
Since the beginning of April, the London-listed company has noticed that sales have improved thanks to ‘resilience’ in both the DIY and assembly segments.
Garnier forecasts that orders will recover in the second half of the financial year as better weather releases pent-up demand and product cost inflation is moderated by lower raw material and freight costs.
Despite heightened economic uncertainty, Kingfisher has maintained its guidance for full-year adjusted pre-tax profit of £634 million.
Garnier said, “We are pleased with market expectations for the company this year and are confident to deliver growth ahead of our markets, strong cash generation and higher returns to shareholders over the medium term.”
Kingfisher has been one of the retail industry’s most prominent winners in the pandemic era, as strict rules on non-essential travel and the growth of working from home encouraged Britons to save extra to spruce up their properties.
It received a further uptick from low mortgage rates, a temporary holiday with stamp duties and an increasing desire from people to live in larger homes.
But trade in the home improvement sector has slowed significantly over the past year as skyrocketing energy prices have propelled household bills and governments have initiated rate hikes to dampen inflation, driving up mortgage costs for homebuyers.
Victoria Scholar, head of investment at Interactive Investor, said: “The post-covid economic reopening has seen consumers replace spending on home improvements with travel, dining and other activities that were largely banned in 2020 and 2021.
“Furthermore, macroeconomic pressures from rising costs, tight household budgets and falling real wages have increased consumer pressure, leading to less spending in Kingfisher’s stores.”
Kingfisher shares were 2.3 percent lower at 241.1 p late Wednesday afternoon, though they’ve grown about 40 percent over the past three years.