Kingfisher, the DIY giant behind B&Q and Screwfix, faces a challenging year with expected profit drops amidst market pressures and a post-pandemic dip in demand.
Kingfisher, the parent company of DIY chains such as B&Q and Screwfix, is bracing for a challenging year ahead with an expected decline in profits amidst various market pressures. The company, which reported a 25.1% decrease in pre-tax profits to £568 million for the year ending January 31, anticipates profits to be between £490 million and £550 million for the current year. This forecast falls below the analysts’ expectations of £560 million. The decrease comes after a pandemic-induced demand surge, which has since waned. Kingfisher’s struggles are attributed to a delay in home improvement demand influenced by housing market dynamics, with like-for-like sales down 2.3% in the first quarter compared to the previous year.
Specifically, the company’s performance varied across regions, with sales in France dropping by 5.9%, while the UK and Ireland saw a modest increase of 0.8%. In response, Kingfisher has initiated a turnaround strategy for its French operations, involving job cuts, store restructuring, and renovations aimed at improving performance. Despite these challenges, the company has committed to opening up to 40 new Screwfix stores in the UK and is planning expansions in France and Poland.
CEO Thierry Garnier highlighted the group’s focus on customer satisfaction and operational efficiency as critical to navigating current uncertainties. Kingfisher aims to manage costs effectively and continuously adapt its strategies to sustain growth amidst the fluctuating market conditions.
The announcement impacted Kingfisher’s shares, which dropped nearly 3% in early trading, evidencing investor concerns over the company’s ability to adjust to the evolving market landscape.
Furthermore, the company’s predicament is set against broader market movements, including oil price surges due to geopolitical tensions and competitive shifts in the automobile industry, particularly in electric vehicle production, showing the interconnected nature of global markets and industries.
