DIY group Kingfisher – which owns B&Q and Screwfix – has seen digital sales grow by 18% to now account for 7% of total sales in the first half of 2019. However, overall, statutory pre-tax profit for the six-month period dropped 12.5% to £245 million at the London-based group. Sales in the UK and Ireland were little changed at £2.7 billion.
In the UK, total sales at B&Q fell 3.3%, while Screwfix offered a glimmer of hope with the trade-focused business posting a 9.9% increase in total sales to £882 million.
The group took its biggest hit in France, where profits dropped by 12.2% across the six months to 31 July. Brexit uncertainty has also hit the UK DIY market, the group says.
However, it continues on its £537 million transformation plan, which aims to up the number of stores, expand its geographical reach and build on its growing success in online – with plans to try and integrate digital and store in the coming years to produce efficiency gains.
The group aims to increase its 643 outlets to 800 in the UK and plans to expand beyond, starting in Ireland this year. Across the business however it plans to close 15 stores, including 11 in France, over the next 18 months.
“Our transformation activity continued in the first half of this year, including new range launches across the group and the rollout of further capabilities within our unified IT platform,” says outgoing chief executive Veronique
Laury. “These activities resulted in some ongoing disruption that impacted sales at B&Q and Castorama France.”
Commenting on the results, Steve Miley, senior market analyst at www.asktraders.com, says: “The ‘ONE Kingfisher’ transformation plan that started in 2016, that puts the clients’ needs at the centre of the company whilst maximising the synergies across the group, continued in the first half of 2019. The group has rolled out new ranges across all brands and an improvement of the IT platform. Leveraging the scale of the business across the group as a part of the transformation plan is paying off, with improvements on the gross margins. Over the period, 59% of product ranges have been unified, with the company on the path to full integration. For the unified ranges, the company has achieved sales growth in four of the seven key categories and a gross profit uplift in all seven. Relative to last year the gross margin for unified & unique ranges increase by 1.5%.”
Miley continues: “The transformation process, that includes cutting down unprofitable stores, continues with 15 stores (including 11 in France) being culled over the next 18 months. Over the period, the company has opened 59 new stores in the UK and Poland and closed 26 stores, with Screwfix Germany being reduced by 19. The company has had a Brexit steering committee in place since 2016, has announced that it anticipates having enough stock build in place by the end of October to cover near-term demand. For the year, the company is expecting to maintain a constant gross margin with expected transformation costs to be in the £50-60m range below what was previously announced.”