Kingfisher, Europe’s biggest home improvements retailer and owner of B&Q and Screwfix, has reported like-for-like sales at its UK and Ireland stores open more than a year were up 2.5 per cent in the ten weeks to 13 July, thanks to the spell of hot weather (release).
Total group like-for-like sales were also up 2.5 per cent in this period, with strong growth in international sales (up 5.3 per cent) balancing out weak (1.1 per cent) sales growth in France. In the UK and Ireland, B&Q enjoyed a 1.9 per cent boost in like-for like sales, with outdoor and seasonal products up nearly 20 per cent to represent nearly 40 per cent of total sales.
This stands in stark contrast to Kingfisher’s previous performance, with like-for-like sales falling one per cent in the 23 weeks to 13 July, driven by a 1.5 per cent decline in UK and Ireland and a 2.5 per cent fall in France.
Commenting, group chief executive Ian Cheshire said:
Following a tough Q1, I am pleased to report that we have been able to capitalise on the better weather conditions in Q2, particularly in the UK, which has helped us to deliver growth. However, underlying consumer confidence remains weak in our major markets, so we continue to focus hard on our self-help margin and cost initiatives. We are on track to deliver a first half in line with our expectations.
John Ibbotson, director of retail consultants Retail Vision, added investors were hoping this wasn’t a short term boost from the hot weather alone.
Could there be a sharper contrast in two consecutive quarters? The heatwave has brought B&Q, and Kingfisher, back from the brink. The fact that sales of fans rose by 1,627% in just one week says it all….
It's not just the weather that has boosted Kingfisher's bottom line and driven its share price to a decade-long high. Investors believe that B&Q will benefit from the return of the property market. The Funding for Lending Scheme and Help to Buy initiative have seen new home purchases come back to life, especially among first time buyers. While the good weather will come to an end, the hope is that the property market will remain in a heatwave of its own. If Thursday's Q2 GDP number comes in strong, then Kingfisher's share price could spring even higher.
Sceptics will rightly point to the structural issues still facing B&Q, namely the UK's gradual move away from home-ownership and the 'Do-it-for-me' culture. Kingfisher's stronger numbers, while seared by the weather, could be raw on the inside.