Published on 12 - September - 2012
Kingfisher's H1 results: retail profit and sales founderRecord wet weather in the UK and Northern Europe was responsible for over £30million less profit (-14.7%) at B&Q's parent company Kingfisher during the 26 weeks to July 28, 2012.
Sales at B&Q fell 3%, with average footfall dropping by a fifth in the first half
For Kingfisher overall sales were down 3.3%, with adjusted pre-tax profits dropping 15.5% to £371m. Seasonal product sales were down 7%, resulting in higher seasonal markdowns to clear excess seasonal stocks and additional marketing to drive footfall and share, reported the retailer.
The results were also impacted by the £10million cost of accelerating the national roll out of new common own brands in the UK.
B&Q's total sales were down 3%, (-6% like-for-like) to £2bn. Sales of outdoor seasonal products were down around 11% with average footfall down 20% during the weather-affected weeks. The bad weather also affected building products, but indoor decorative products saw an increase. Retail profit at B&Q declined 24.1% to £125m, with gross margins down 40 bps despite ongoing sourcing benefits, reflecting markdowns needed to to successfully clear seasonal stock. This was also reflective of the retailer's decision to accelerate clearance ahead of the national rollout of new, common own brand ranges of tiling and décor products into Q2.
Despite the downturn in sales, the report held some positives, with Screwfix's total sales growing 8.9% to £273m, with retail profit up 19.1% to £20m. The retailer benefited from the roll out of new outlets, the success of 'click, pay & collect', more direct sourcing and continued tight cost control.
Kingfisher's ongoing 'Creating the Leader' programme was also praised, with the 2012/13 milestones reportedly met. Self-help initiatives, including higher direct sourcing, helped limit the overall profit decline as well.
Kingfisher group chief executive Ian Cheshire said: "This has been a tough first half with unprecedented wet weather throughout the key spring and summer seasons in Northern Europe. This affected footfall and demand for outdoor maintenance, gardening and leisure products, which normally account for a significant proportion of our first half sales.
"However, we took action to clear excess seasonal stocks, drive indoor product sales and tightly manage cash, as well as accelerating our self-help initiatives. Whilst we were unable to offset fully the adverse weather impacts, our efforts meant we exited the first half in as good shape as possible and with net cash on the balance sheet. Our new medium term self-help plan, 'Creating the Leader', is now well underway and we are on track to deliver our key milestones for 2012/13.
"Whilst an uncertain economic backdrop has been a feature of our markets for some time, we recognise that this is unlikely to improve for a while. In the short term we will continue to focus on trading effectively, whatever the market conditions, whilst accelerating our self help initiatives where practical and remaining agile in order to capitalise on opportunities as they arise. Having got off to a good start with our new 'Creating the Leader' programme, I am very confident that we can create a world class home improvement retailer and unlock the full potential of our international talent and scale."
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