Following today’s release of Kingfisher’s figures for the six months ending 31st July 2023; Jamel Boughedda, retail analyst at GlobalData, a leading data and analytics company, offers his view: “Kingfisher’s group sales fell by 1.0% on a constant currency basis to £6.9bn due to inconsistent weather and a challenging macroeconomic market, especially in France and Poland. Seasonal sales, which fell 5.9% on a like-for-like (l-f-l) basis dragged down Kingfisher’s performance as unseasonal weather reduced demand internationally, with France down 8.5% and other international markets 9.3% lower. Despite an improving volume trend throughout the period, group core and big-ticket sales also fell by 1.0%.
“This weaker performance combined with higher operating costs and investments in technology and store openings have filtered through to its bottom line, with its operating profit declining 30.9% to £367m. Kingfisher’s higher costs have caused it to lower its FY2023/24 adjusted pre-tax profit expectations to £590m, down from its previous guidance of £634m.
“B&Q l-f-l sales grew 1.0% in H1, with the UK being the only region to grow during the period. B&Q’s sales were supported by a recovery in seasonal products during its Q2, with l-f-ls up 3.3%, as well as a resilient performance from its core and big-ticket category as consumers continue to refresh their homes. B&Q gained ground online with total e-commerce sales up 18.5% and penetration being 1ppt higher on H1 FY2022/23. Its online marketplace drove growth, accounting for 33% of online sales in July and driving traffic to its website, as it has significantly boosted its range to over 700,000 SKUs – with consumers also attracted by features such as its free one hour click & collect.
“B&Q’s TradePoint banner struggled, however, as l-f-l sales fell 1.8% mainly due to its decision to switch off trade instant vouchers during promotional events. In comparison, Wickes’ TradePro offer saw sales increase by 10% between January and June 2023. TradePoint’s decline is concerning as it launched 18 new counters and increased sign-up to its loyalty program by 37% during the period. To recover, B&Q should leverage its loyalty card members to find new ways to serve its trade customers.
“In contrast, Screwfix has flourished as its continued expansion and investment boosted performance, with total sales up 9.2% (+3.1% on a l-f-l basis). The mobile app has been a success as it reached two million monthly active users while its app-only campaigns and offers helped online sales rise by 3.9%. Its app will remain important as convenience is key for trade customers.
“Kingfisher reported that its Q3 l-f-l sales to date are down 2.4%, although core and big-ticket category volumes are improving, as a poor international performance more than counterbalanced improved sales in the UK & Ireland. To support performance, Kingfisher is leveraging the outperformance of Screwfix by launching it as an online pureplay in 20 countries and is testing smaller format outlets for B&Q and Castorama. Initial results have been encouraging and the collapse of Wilko may offer it more potential sites to operate in.”
