The recent unpredictable weather has created havoc in many areas of the UK, with widespread flooding in the south and blizzards in the north making the daily commute exceptionally difficult for many workers. However, it has also taken a toll on the retail industry – in particular home improvement brand B&Q, which has revealed the hit its profits took during the washout summer last year.
Parent company Kingfisher recorded a profit drop of £25 million overall, which it puts down to the wet weather last summer deterring consumers from purchasing items to brighten up their gardens. Furthermore, sales of outdoor items such as gazebos and fire pits predictably slumped by up to a fifth during the wettest weeks.
Altogether, this added up to a pre-tax profit of £691 million in the year to February – a drop of 13.3 per cent. Similarly, like for like sales during the period fell by 2.9 per cent to £10.6 billion.
Kingfisher employs over 25,000 staff across 633 commercial properties in the UK, comprised of both B&Q stores and specialist brand Screwfix branches. Screwfix fared slightly better than B&Q in 2012, with 60 new store openings contributing to a total sales climb of 9.8 per cent to £577 million.
The majority of sales seemed to come from new store openings, as stores which had been open for more than a year recorded a 2 per cent drop in total sales. Therefore, Kingfisher has already pledged to open a further 50 Screwfix branches in the UK in the coming 12 months.
Kingfisher chief executive Ian Cheshire remains optimistic about the future as internal restructuring put the group in “good shape” for the year ahead. This includes a £38 million net cash total recorded on the annual balance sheet. However, he is unable to deny the difficulties primary business B&Q faced last year.
He admits; “We have had a tough year, impacted by unfavourable foreign exchange, record adverse weather in the UK and declining underlying markets in each of our three key territories.”
Yet while the majority of issues facing the Kingfisher group have been put down to poor weather conditions, not everyone is quite so convinced. In fact, analyst Kate Calvert of Cantor Fitzgerald believes the route of the downturn at both B&Q and Screwfix may lie within the stores themselves.
She explains; “We do not view Kingfisher’s weak full year 2013 performance as a one-off but believe the group faces structural pressures suffering from having too much space for the new multi-channel world.
“Its stores are too large, difficult to shop and not aligned to the new trend of convenience.”
Do you think that the washout summer in 2012 is really to blame for Kingfisher’s downturn, or do you agree with Ms Calvert and think the huge warehouse-style properties operated by B&Q do not fit the consumer desire for basic layouts and convenience anymore?
