Following today’s release of Kingfisher’s figures for the six months ending 31st July 2024; Oliver Maddison, Retail Analyst at GlobalData, a leading data and analytics company, offers his view: “Kingfisher returned a weak set of results in H1, with group sales falling by 1.4%, and like-for-like (l-f-l) sales down 2.4%. Kingfisher’s French operations proved the most significant sticking point in its H1 results, with revenue declining 7.0% on a constant currency basis, compared to a still weak 1.0% increase in the UK, and increases of 2.8% in Poland and 2.3% in Iberia. ‘Big-ticket’ items (kitchens, bathrooms and storage) performed the worst across the business as a whole, seeing l-f-l sales decline by 6.8% as consumers continued to struggle financially, but also underperformed relative to UK rival, Wickes.
“The key factor explaining B&Q’s underperformance was its relatively high mix of ‘big-ticket’ items in its offering compared to Screwfix; whilst both fascias demonstrated very similar l-f-l sales figures for ‘core’ and ‘seasonal’ items, B&Q saw an 11.6% decline in l-f-l sales of big-ticket items in comparison to Screwfix’s 0.4% l-f-l big-ticket sales growth. Even accounting for the difference between the two fascias, this represents an underperformance on B&Q’s part given that otherwise underperforming Wickes saw its ordered sales for kitchen and bathroom fall just 4%.* Nonetheless, improvements in the housing market and consumer buying power are likely to support B&Q’s big-ticket sales moving forward, while initiatives such as the expansion of the B&Q Local fascia and the recently-announced partnership with Deliveroo should have the effect of reducing B&Q’s mix of big-ticket items, sheltering it from future swings whilst expanding its presence in the other categories.
“Kingfisher identified trade as its strongest growth avenue within its UK operations, with Tradepoint achieving l-f-l growth of 7.1%. Given the comparatively weak growth in sales to consumers, the trade market has grown in importance for the DIY sector, leading B&Q’s latest advertising campaign to specifically focus on its trade customers. Despite the apparent strength of its Tradepoint proposition, this is another area where it underperforms its rival, Wickes, which saw its TradePro sales grow by 14% in its H1.*
“Screwfix continued to be the main driver of UK growth, delivering 4.5% growth, compared to B&Q’s 1.2% decline. Given Screwfix’s l-f-l sales growth was 1.2%, this means its overall sales growth was primarily driven by the expansion of its store footprint, with the retailer having opened 16 new stores across the UK and Ireland. Two of these stores were for the small-format Screwfix City fascia, with a further 18 planned to open before the end of the year and the longer term aim of 100. Alongside the rollout of the B&Q Local format and the Screwfix Sprint service, this represents a clear emphasis on convenience within Kingfisher’s UK operations – to ensure the success of these ventures, Kingfisher must ensure a well-curated product offering and that its service provision adds sufficient value.
“Castorama and Brico Dépôt both achieved similarly poor results, seeing sales decline by 7.7% and 6.3% respectively. While the reorganisation of the French business, which granted more independence to both fascias, has been completed, the improvements to its poorly performing French stores are ongoing. Kingfisher must focus on improvements to its French margins, which fell from 4.5% to 3.3%, and are significantly below the 9.6% margin in the UK. The launch of the Castorama marketplace appears to be supporting its online offering, with ecommerce penetration increasing to 7%, up from 6%, compared to the flat 5% penetration achieved by Brico Dépôt.”
*Note: Although the growth figures cited for B&Q are like-for-like, whereas Wickes’ figures are not, the minimal change in store numbers relative to the previous year nonetheless means that the numbers can be used for an approximate comparison.
