This time last year, the news coming from garden centres and DIY stores was less than positive. A washout summer and a wide choice of sporting events on television drove people indoors, causing sales to drop for both chain and independent brands across the country.
Fortunately, the summer this year appears to have reversed this trend, with the UK’s largest DIY group reporting a surge in sales over the past 6 months. Kingfisher, which owns the B&Q and Screwfix brands, posted a rise in total sales of 4.3 per cent in the half-year to August 3rd, equating to a sum of £5.7 billion.
This greatly contributed to a rise in pre-tax profits, which climbed 10 per cent to £401 million.
Although the group experienced a fall of 0.8 per cent in like for like sales during the period, this was largely due to the 4.2 per cent drop which occurred in the first three months of the period. During the second quarter, sales rebounded impressively thanks to the hot weather, almost making up for the first quarter’s poor performance.
Kingfisher chief executive, Ian Cheshire, is adamant that this encouraging result will not make the group complacent as the market remains unpredictable.
He says; “After a difficult first quarter, in which sales and profits were affected by record bad weather, we were able to capitalise on the better weather in the second quarter particularly in the UK, to grow quarterly profits and so deliver a broadly flat result across the half.
“However, underlying consumer confidence remains weak in our major markets, so we continue to focus hard on our self-help initiatives to drive growth, margin and cost efficiencies.”
Due to the chilly spring season, sales of outdoor products dropped by 10 per cent in the first quarter, but as the sunshine appeared consumers upped their purchases of items such as garden furniture and barbecues – this equated to a 9 per cent sales rise for the category, leaving only a small sales deficit at the half year mark.
In order to lower operating costs, Mr Cheshire made the decision to downsize B&Q’s commercial property portfolio in the UK. He is presently in negotiations with large food stores such as Tesco regarding 18 sites, and if a deal can be struck it is estimated that B&Q’s UK floor space will drop by around 5 per cent.
Yet B&Q is expanding in other areas, as Mr Cheshire points out.
He concludes; “Looking ahead, we remain ready to capitalise on any improvement in conditions or opportunities as they arise, including the potential pick up in the UK housing market.
“In the meantime, our self-help plan, ‘Creating the Leader’, continues to progress well, including the acquisition of 15 stores in Romania – our first new country entry in seven years.”
With winter approaching once more, and the potential for new custom in outdoor DIY projects waning, Kingfisher must hope that internal home improvements are on the minds of British consumers in order to capitalise on its present strength.
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