Kingfisher, the DIY group that owns B&Q in the UK and Brico Depot in France, saw its pre-tax profits plummet 65.7% to £103m in the year to 31 January, on sales down 1.5% to £11.51bn.
The big drop in profits was due to exceptional items that largely reflecting impairments for its stores and Russian unit. Adjusted pre-tax profit was down 5.2% to £544m.
Group like-for-like sales during the year slipped 1.5% with growth in its Screwfix chain, as well as in Poland and Romania, offset by weaker sales at B&Q, and in France, Russia and Spain.
Alongside the results, Kingfisher revealed that it took a big hit at the start of the coronavirus lockdown after it closed most of its stores, with like-for-like sales down 74% in the first week of April. However, it was able to reopen for business earlier than other retailers with sales up by more than 25% since the second week of May as the lockdown encouraged people to take on DIY projects.
Group like-for-like in the second quarter period to 13 June are up 21.8%, boosted by a fourfold increase in e-commerce sales.
Kingfisher is not providing specific guidance for its 2020/21 financial year given the uncertainty around the pandemic. The group has taken steps to reduce costs, preserve cash and boost liquidity to get it through the crisis. It said back in March that it would not be paying a final dividend.
The group is implementing a turnaround plan, led by CEO Thierry Garnier, the former Carrefour exec who joined the business in September last year.
He said: “While the coronavirus crisis has obviously shifted our immediate priorities, we have continued to plan for the longer term and implement our new strategic plan. It would be a mistake not to.
“Kingfisher is well positioned within a home improvement market that is resilient and has attractive long-term growth prospects. We have strong market positions and distinctly positioned retail banners that address diverse customer needs. These are major strengths in a world that is so volatile and uncertain.
“Our clear intent is to become a more digital and service orientated company, using our strong store assets as a platform. We will continue to develop our own exclusive brands as a differentiator, cater for diverse local customer needs, and each retail banner will have its own positioning and plan. We will ‘power’ these banners as a Group. This is our new strategic direction, ‘Powered by Kingfisher’.”
NAM Implications:
- Kingfisher appear to be making the right moves…
- …and hopefully the markets will allow some leeway.
- An opportunity for suppliers to optimise the bounce-back opportunity?
