Despite Screwfix posting a robust performance for the year, with LFLs up 10.1%, “softer sales patterns” were reported across Screwfix and B&Q, as demand for big-ticket lines slowed.
Sales across Kingfisher UK & Ireland operations were up 0.4% (+0.6% LFL) to £5,003million, bolstered by a continued strong performance by Screwfix and modest price inflation. The increases posted by Screwfix were offset by the impact of last year’s B&Q store closures and the “disruption” of the transformation of the business, said Kingfisher.
The results for the year ended January 31, 2018 mark the second year in Kingfisher’s five-year transformation plan that aims to deliver a £500m sustainable annual profit uplift by the end of FY 20/21.
During Q4, however, the UK & Ireland businesses experienced softer sales patterns, with B&Q reporting declines of -5.1% on a like-for-like basis and Screwfix up just 7.1% LFL. The business has attributed this to a slowdown in demand for big ticket categories, such as kitchens.
Gross margins were also down 30 basis points and a focus on cost control will continue, says the company. Meanwhile, retail profit grew by 5% to £375 million.
B&Q total sales declined by 5.3% to £3,488million, which reflected annualisation of its completed store closure programme. LFL sales declined by 2.8% after a 0.7% benefit from sales transference associated with the store closures. LFL sales of seasonal products were down 2.8% while sales of non-seasonal products, including showroom, were also down 2.8%.
With click & collect now available across 33,000 B&Q products, the DIY chain’s digital sales are said to be making good progress, up 11% and now accounting for 4% of the retailer’s total sales.
Screwfix total sales increased by 16.7% (+10.1% LFL) to £1,515million driven by strong growth from its specialist trade desks, strong digital growth (e.g. mobile +86%; click & collect +38%); and the continued roll out of new outlets.
Screwfix opened 60 net new outlets during the trading period, taking its portfolio to 577. The company maintains it is still on target to reach its goal to have around 700 Screwfix outlets in the UK.
Kingfisher said its outlook in the UK, as it enters FY 18/19, is more uncertain than in other geographies it operates.
CEO Véronique Laury said of the results: “Our performance this year has been mixed, however, with solid growth at Screwfix and Poland, offset by continued weaker sales in France and some business disruption, principally reflecting product availability and clearance. We are acting on the causes of this disruption, however next year will be another big year in our transformation plan. The pace of change is quick and impactful but necessary as we build the new ONE Kingfisher engine to support our ambition to be the leading home improvement company, based on putting customer needs first. The outlook for our main markets is also mixed. The UK is more uncertain, France is encouraging yet volatile, whilst the market in Poland remains supportive.”
Despite mixed performances and outlooks, Kingfisher remains confident in its abilities to deliver on its five-year plan. Ms Laury continued: ““We have made good progress in this second year of our ambitious five-year transformation after a significant step up in the level of activity. For the second year in a row, all our key strategic milestones have been met and I am really pleased to say that we are starting to see tangible delivery of our plan. The changes are now visible across our stores and online. Over a third of our ranges have now been unified and they are being well received by customers. We are buying as ONE and are starting to see the customer and financial benefits coming through, both in sales and gross margins. Our digital initiatives are gaining momentum as we enter the final year of roll out of our unified IT platform. I am also pleased to see that our operational efficiency initiatives, focusing initially on goods not for resale, continue to deliver and are now gathering pace as we start to unlock further opportunities.”
She added: ““Given our good progress so far, and supported by our highly engaged teams, I remain confident in our ability to deliver our plan and in the customer and financial benefits it will generate.”