Kingfisher announces 70% profits slump

B&Q owner Kingfisher said the home improvement market remained stuck in the doldrums today, after announcing its UK profits slumped by 70%.

The group said unusually cold weather in March compounded tough trading conditions as like-for-like sales fell 6.8% in the 13 weeks to April 29 and retail profits dived to £21.9m (€32.1m) from £73.7m (€108m) a year earlier.

Much of the downturn in profitability was due to the cost of promotional activity as B&Q cut prices in an effort to stimulate demand.

While Kingfisher reported better performances from its divisions covering France and the rest of Europe, the company's retail profits in the three-month period were still 45.4% lower at £68.4m (€100.32m).

Chief executive Gerry Murphy described the UK home improvement market as “very tough” but said the company made progress with initiatives to improve customer service and product choice. Sales over the Easter and Bank Holiday period were also stronger, as demand benefited from targeted promotional activity.

Mr Murphy said: “Overall, the UK market remains very promotional and weather-sensitive and it is not clear that stronger holiday sales represent an underlying recovery in demand.”

Stripping out sales from its Screwfix Direct division, Kingfisher said B&Q total sales were down 7.7% at £945.4m (€1.39bn), with the fall increasing to 8.8% on a like-for-like basis.

Sales of gardening and outdoor products were affected by the cold weather in March while a major fire at a B&Q distribution centre in February disrupted kitchen sales and extended delivery times.

On top of the declining sales, Kingfisher said it faced a 4% rise in costs during the period.