B&Q owner Kingfisher to reveal profits fall

Profits at B&Q owner Kingfisher are expected to tumble when the DIY firm reports half year results next week, after it was hit by wetter than usual summer weather and amid a slowing property market.

Analysts at broker Jefferies forecast that pre-tax profit for the first six months of the year will fall 18% to £351 million, with a hefty chunk of the decline coming from transformation costs.

Chief executive Veronique Laury is overseeing a turnaround at the firm, which has seen Kingfisher close underperforming stores and rejig its product offering.

A second quarter trading update issued by Kingfisher last month warned that the programme had caused "business disruption", and came alongside lacklustre figures.

Total sales at B&Q fell 7.7% to £967 million as a slowing housing market in the UK following the Brexit vote means a potential slowdown for DIY retailers.

Like for like sales at B&Q dropped 4.7% in the period, with Kingfisher also pinning the fall on tough comparatives from last year and a strong first quarter in 2017, when better weather meant shoppers bought seasonal products early.

George Salmon, equity analyst at Hargreaves Lansdown, said: "Kingfisher were at pains to point out its second quarter was impacted by seasonal swings, but the declines were sufficient to ensure like-for-like sales at B&Q joined the French divisions Castorama and Brico Depot in negative territory.

"This underwhelming Q2 update followed an unspectacular first quarter, meaning aggregate half year numbers are unlikely to bring much joy for investors this time."

However, total sales are expected to rise from £5.7 billion to £6 billion, helped by the continued success of Screwfix.

In August, Kingfisher said the trade-focused chain saw like-for-like sales rise 10.8% as its strong run of form shows little sign of slowing down.

Screwfix has been the stand-out performer for Kingfisher of late, regularly clocking up double-digit sales increases.

In March, Kingfisher signalled it had finished a B&Q store closure programme, which has seen it shut 65 shops and slash around 3,000 jobs in the UK and Ireland over the last two years.

As part of Ms Laury's revival, she is aiming to boost profits by £500 million a year by 2021 and she is also likely to update the market on her turnaround efforts.

Mr Salmon added: "While it would be nice to see Veronique Laury outline a more upbeat outlook, her update on the potentially transformative ONE Kingfisher plans is likely to carry greater weight.

"The ambitious plans remain some way off completion, but given the targeted £500 million per annum cost saving, the tone of the update on progress will be important.

"So far, the group has remained optimistic, despite elements of disruption creeping in."

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