Following today’s release of Kingfisher’s figures for the year ending 31 January 2023; Jamel Boughedda, retail analyst at GlobalData, a leading data and analytics company, offers his view: “Kingfisher’s sales fell 0.7% to £13.1bn in its FY2022/23, and 2.1% on a like-for-like (l-f-l) comparison as the prior year’s exceptionally high demand for home renovation products could not be repeated. UK & Ireland l-f-l sales dropped 6.9% over the year as consumers’ discretionary incomes continue to be stretched amid soaring inflation and DIY activities started to normalise. However, impressive performances in Poland and Romania, with l-f-l sales up 13.8% and 7.8% respectively, were able to prevent steeper losses, supported by its robust sales of DIY and DIFM categories and the opening of seven new Castorama stores in Poland. Kingfisher announced a 20.2% decline in its pre-tax profits for FY2022/23 as it came up against stronger comparatives following a spike in DIY demand over lockdowns, which has struggled to hold up as the cost-of-living bites.
“In the UK and Ireland, B&Q underperformed, with l-f-l sales down 8.8% against very strong comparatives (+12.3%) and a particularly weak performance in its weather-related categories (-16%), given the extreme heat over the summer. B&Q’s online sales fell 7% but were up 130% on a three-year basis, showcasing a resilient performance given a strong first half in the prior year, as lockdowns took effect. B&Q’s trade-only arm, TradePoint, outperformed the rest of B&Q, with l-f-l sales down just 1.2% year-on-year as it continued to expand, opening 18 counters in the UK within B&Q stores and expanding into Ireland. Stubborn inflation has driven customers towards value propositions, benefitting TradePoint as it rewards loyalty through savings on building essentials. Screwfix’s performance was much more robust, with UK and Ireland like-for-like sales down 3.4% as it made improvements such as rolling out its one-hour delivery Screwfix Sprint, and it opened a record 82 stores. The retailer continues to expand internationally, opening five Screwfix stores in France and up to 25 new stores planned for FY2023/24.
“Kingfisher’s current trading performance is promising, with total sales in February up 1.9% (+0.5% l-f-l) and sales on big-ticket items broadly flat, a resilient start to the year given the macroeconomic challenges affecting the DIY and wider home market. The business expects some impact in March as the adverse weather conditions in the UK and Ireland and strong comparatives in Poland will have dampened its performance. With consumers continuing to shy away from big-ticket purchases due to inflation, its performance in the UK is likely to suffer in 2023, making its international expansion even more crucial to maintaining demand in the near term. The group anticipates an adjusted pre-tax profit of £633m in FY2023/24, down on FY2022/23. Although cost pressures will ease throughout the year, its costs will remain in 2023, impacting the retailer’s profits as demand for DIY continues to be stifled.”
