Following today’s release of Kingfisher’s figures for the three months ending 31st October 2023; Jamel Boughedda, retail analyst at GlobalData, a leading data and analytics company, offers his view: “The challenging French market and its future prospects has contributed to Kingfisher once again lowering its full year adjusted pre-tax profit guidance, with the group now expecting this to be £560m for the year, down from £590m. An 8.5% fall in the French market led to group sales declining by 2.7% on a constant currency basis to £3.2bn and more than counterbalanced a resilient performance across its UK division, which increased by 3.3%. Other international sales also struggled, declining by 6.8% on a constant currency basis as the Polish market continued to struggle.
“A deterioration in the French DIY market in September and October, with Banque de France data indicating the market was down 9.1% and 5.7% in September and October respectively, and unseasonable weather saw like-for-like (l-f-l) sales in France fall 8.6%. Brico Depot’s performance fell below market expectations (l-f-l -10.6%) as its higher exposure to autumn and winter seasonal products impacted performance. Brico Depot sales grew just 0.2% in the prior year quarter, with this being supported by surging energy prices boosting insulation and heating goods, a factor that has not held up this year.
“Screwfix has invested heavily in its international operations, with it now operating 13 stores in France. However, with both Screwfix and Brico Depot serving similar trade customers, Screwfix France may affect Brico Depot’s sales. Kingfisher must ensure that the investment in Screwfix France does not hinder Brico Depot and that the two offers are distinct. Castorama l-f-l sales fell 6.7%, in line with market expectations, as it went against strong comparatives in plumbing and heating. Castorama’s planned launch of its ecommerce marketplace, with Kingfisher aiming to replicate its performance in the UK, alongside continuing to develop its trade propositions will help rally its performance in its FY2024/25.
“UK & Ireland l-f-l sales grew 1.1%, aided by growth in both B&Q and Screwfix (up 1.1% and 0.9% respectively.) Once again, TradePoint outperformed, with l-f-l sales of 3.1% and a penetration of 23% of B&Q’s total sales. The UK trade market has continued its upward trajectory, aided by stronger demand, with B&Q strengthening its proposition through trade-only deals and events, to encourage additional spending during a period of weaker consumer confidence. Excluding trade, sales were broadly flat at 0.4% with surfaces & décor and tools & hardware outperforming, with décor being supported as homeowner’s refreshed their homes.
“Screwfix continues to be Kingfisher’s star performer, in which the opening of 11 new stores in Q3, (bringing its total to 23 net new stores in its year to date) and acquisition of Connection Distribution Services has resulted in sales increasing 6.8%. A strong performance in tools & hardware and building & joinery more than counterbalanced plumbing and heating goods which were impacted by the weather. The current cooler November weather, however, will likely cause customers to increase their purchases for plumbing and heating, following a slower start in October. This pent-up demand may cause an uplift in performance for Kingfisher in Q4, though France is likely to drag on its overall performance.”
