B&Q owner cashes in as Britons improve homes rather than move
British consumers are continuing to spend on improving their homes and gardens as an alternative to moving home amid soaring mortgage rates and a surge in household bills, according to the owner of B&Q and Screwfix.
Sales at Kingfisher’s UK and Irish business rose 1.7% in the six months to the end of July as homeowners bought 11% more insulation materials at B&Q in an attempt to offset winter heating bills and were also revamping bathrooms and gardens.
“As people are moving less they spend more time to renovate and maintain. We have seen good take up in kitchen and bathrooms with a lot of [bathroom] projects this year,” said Thierry Garnier, its chief executive.
He said that in the UK, Kingfisher continued to see a “healthy consumer” despite the cost of living crisis and this year’s unpredictable weather. Sales of barbecues and garden furniture were hit by the wet in early spring, but this month’s hot weather had led families to buy more fans and garden furniture than usual.
“We see very good momentum,” Garnier said, suggesting that low unemployment and savings made during the pandemic had cushioned many from increases in the cost of living.
However, shares in Kingfisher fell almost 8% on Tuesday morning after the company revealed it had wiped £44m off its profit expectations for the year, saying it now expected to make £590m after poor performance at its Polish and French chains.
Total sales rose 1.1% to £6.9bn in the half year to 31 July but pre-tax profits sank by a third to £317m amid higher operating costs.
Garnier blamed the “challenging macroeconomic climate” in Poland for a 11% slump in sales at established stores and 64% dive in local profits as high inflation and increasing interest rates affected consumers confidence.
In France, where sales fell 3.8% in the half year and profits slid by a fifth, he said consumer sentiment was badly affected by concerns about food price inflation and worries about pension reform as well as poor weather.
However, the group will open 20 more Screwfix stores in France, adding to nine already open, and will expand Screwfix online into 20 European countries over the coming months. It will open five more Castorama stores in Poland, two fewer than previously planned and is also closing two experimental franchise outlets in Saudi Arabia.
Garnier said Kingfisher was expecting inflation on DIY goods to be lower across all the countries it operates in over the coming months as the cost of some raw materials were coming down, although that was being offset by higher energy and labour costs.
He added: “Factories in Asia and China are not full so will have the ability to negotiate prices down and on top of that there are much lower fright costs – divided by 10 more or less from 2020.”