B&Q owner Kingfisher warns over profits again because of French sales woes
The group now expects full-year underlying pre-tax profits of around £560 million after cutting its guidance in September to about £590 million.
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B&Q owner Kingfisher has warned over profits for the second time in as many months after being hit by ongoing sales woes in France and across Europe.
The group said it now expects full-year underlying pre-tax profits of about £560 million, sending shares down 6% in morning trading on Wednesday.
The alert comes after it slashed its guidance in September to around £590 million, having originally forecast £634 million for the year.
Kingfisher said it was seeing a more “resilient” DIY market in the UK, with third quarter like-for-like B&Q sales up 1.1% and Screwfix ahead 0.9%, but this was offset by an 8.6% tumble across its French arm, where it trades as Castorama and Brico Depot.
Sales were also lower across its other European markets, including a 9% sales plunge in Poland.
In France, our performance was impacted by a weak retail market, as well as a delayed start to insulation, plumbing and heating sales – to which Brico Depot is more heavily weighted – due to unusually warm autumn weather, and strong prior year comparatives in these categories
Overall group comparable store sales fell 3.9% in the three months to October 31.
The firm said it was cutting costs in France but it was not enough to counter falling sales.
Thierry Garnier, chief executive of Kingfisher, said: “Our UK banners performed well in the third quarter, with B&Q, TradePoint and Screwfix growing sales and market share.
“In France, our performance was impacted by a weak retail market, as well as a delayed start to insulation, plumbing and heating sales – to which Brico Depot is more heavily weighted – due to unusually warm autumn weather, and strong prior year comparatives in these categories.”
“Reflecting the weakness of the French market, and notwithstanding our proactive cost actions, we have lowered our group profit guidance for the full year,” he added.
He said there would be some ongoing cost price inflation on products, although at a “significantly lower level”.
The group said its fourth quarter to date had continued to see similar trading, with better trading in the UK and Ireland but ongoing weakness in France, where like-for-like sales are 7.5% lower so far.
Overall group comparable sales fell 3.4% in the three weeks to November 18.
The firm’s cost actions in France include “strengthened actions on flexing staffing levels”, cutting nonessential spending and structural cost cutting.