Kingfisher “now running out of out of nails to keep its full-year target intact”

B&Q and Screwfix owner Kingfisher has reported a 29.5% drop in its first-half profits as the pandemic-fuelled DIY boom slows as customers focus on fastening the belt.

Adjusted pre-tax profits fell to £474 million in the six months to 31 July, down from £677 million year-on-year

Despite sales falling 4.1% to £6.8 billion, the retail group pointed out that sales were still “significantly” ahead of pre-pandemic levels.

Kingfisher also said that it was observing resilience in outdoor and ‘big-ticket’ product categories, despite the cost-of-living crisis.

Supply chain issues have also been ironed out after problems during the pandemic had left in-store product availability scarce.

“Kingfisher has delivered a very resilient first half of sales. While facing very strong comparatives from the prior year as well as a more challenging environment,” Kingfisher chief executive Thierry Garnier said.

“Looking to the months ahead, although trading in the year to date has been in line with our expectations, we remain vigilant against the more uncertain economic outlook for the second half.

“We are therefore focussed on delivering value to our customers at a time when they need it most. You can expect continued strong execution, with a focus on growing sales and market share, effective management of our gross margin, and alignment of our costs and inventories to market conditions.”

The company has made an “encouraging” start to trading in its third quarter, Garnier said. Like-for-like sales to 17 September down 0.7% on the year but up 15.2% on a three-year basis.

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Third-quarter trading was consistent with its full-year adjusted pre-tax profit guidance of about £770 million, however the company had to run several trading scenarios to take into account the potential for a more uncertain economic environment.

According to these, profit for the year is expected to fall between £730 million to £770 million.

Hargreaves Lansdown senior investment and markets analyst Susannah Streeter said: “The number of amateur builders, painters and carpenters hanging up their tool kits is growing as homeowners scramble around for savings, intently focused on finding ways to cut their energy bills.

“Although the purchase of outdoor bigger ticket items have remained resilient, it’s a far cry from the boom last year when people spent lockdown savings doing up their homes and gardens.

“Kingfisher’s numbers paint a picture of the waning DIY craze, with sales dropping by 4.1% to £6.8 billion from the £7.1 billion reported the same time last year.

“Instead of ‘nice to have’ makeovers, customers are piling trolleys high with insulation to help them cut soaring energy bills and prepare for a tough winter ahead.

“Sales of insulation products have jumped by 82% as homeowners fret about the jump in fuel costs, which even with the price freeze are still set to march much higher than last year.

According to Streeter, the company’s supply chain headaches haven’t eased. “The company is finding it much harder to cope, with volatility continuing,” she said.

“Commodity prices may have dropped off recently but it takes time to feed through and the time lag is hurting. Kingfisher is now running out of out of nails to keep its full-year target intact.”

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