Kingfisher shares rocket after B&Q owner lifts profit target
Home improvement group Kingfisher saw its shares rocket after the group lifted its profit target, despite summer heatwaves pushing down sales at B&Q.
The FTSE 100 retailer, which also owns Screwfix, said it now expects to make a pre-tax profit of between £595m and £635m, having previously guided between £565m and £625m. Last year, the group posted a £560m profit.
Kingfisher’s shift towards “trade” customers – builders, plumbers and electricians – has driven this boost in forecasts, the group said. Its shares jumped by more than eight per cent to 332p in early trading.
The firm returned a pre-tax profit of £400m in the six months to July, improved by more than 18 per cent from last year. Like-for-like sales across the group edged up by 0.1 per cent.
But the group’s forecast was dragged down by the performance of B&Q, which suffered a 2.9 per cent drop-off in like-for-like sales, driven by a five per cent decline in the sale of “big ticket” items like kitchens and bathrooms.
Kingfisher said its bathroom ranges have “underperformed subdued markets,” adding that it has launched a “comprehensive” review into these products.
The group said sales fell at B&Q because record summer heatwaves drove customers away from shops and towards online shopping. The retailer’s market share remains “broadly stable,” it added.
Consumer environment ‘mixed’
B&Q recently launched its first trade-only store. Kingfisher said sales in this market remained “resilient,” gaining 0.2 per cent to £490m. The group has said it wants to reach £5bn in trade sales across its retailers.
Trade customers visit Kingfisher stores more often and spend more than retail customers, the group has found.
Sales at Screwfix jumped by 5.6 per cent in the six months to July, owing to a 7.3 per cent uplift in its seasonal ranges. The heatwaves boosted the sale of cooling products and garden seating, Kingfisher said.
The group saw a 2.2 per cent uplift in sales in its Polish market, while sales dipped by 2.3 per cent in France.
Kingfisher chief executive Thierry Garnier, who is set to leave the business, said the group’s shift towards trade customers and e-commerce is “creating new growth opportunities and strong financial discipline supporting performance across the business.
“While the consumer environment remains mixed, our consistent delivery, strategic progress and opportunities ahead give us the confidence to upgrade our guidance.”