Home and DIY retail group Kingfisher has seen full-year profits plunge 11.4 per cent to £715 million as record wet weather affected trade in a “tough year”, it has been announced today.
In the 12 months ending January 31st 2013, group sales declined 2.4 per cent to £10.8 million while retail profit fell 11.4 per cent to £781 million.
Blaming weakened consumer confidence and adverse weather conditions, Kingfisher reported a nine per cent fall in sales of seasonal products while UK & Ireland trading remained slow.
Ian Cheshire, Group CEO at Kingfisher, said of the figures: “We have had a tough year, impacted by unfavourable foreign exchange, record adverse weather in the UK and declining underlying markets in each of our three key territories.
“Whilst we have been unable to fully offset these headwinds, the hard work of our teams and our firm focus on our established programme of self-help initiatives means we ended the year in good shape with net cash on the balance sheet, higher market share and having generated economic return for our shareholders.”
Kingfisher UK & Ireland saw total sales decrease two per cent over the year to £4.3 billion while like-for-like (LFL) sales dropped 5.2 per cent while home & DIY retail B&Q’s domestic operations also faltered.
Last month, B&Q’s Irish arm appointed an Examiner to the business as a result of the turbulent Irish economy and today the retailer revealed a 3.6 per cent decline in total sales across its UK & Ireland operations.
LFLs dropped 5.6 per cent to £3.7 billion after the retailer’s nine Irish stores incurred losses of £7 million, though the group was keen to point out that it continues to outperform the troubled homewares market.
B&Q’s two per cent sales drop remains above the overall market figure of three per cent and analyst firm Conlumino’s Managing Director Neil Saunders said this is a positive indication of the strength of the retailer’s strategy.
“Despite the negative results, it is important to underline the fact that B&Q has actually gained share as its own declines have been less than those across the whole market,” Saunders said.
“To a large extent this justifies the current strategy of investing in price which helps stimulate spend, defends against discounting activity at competitors and helps to make buying big ticket items like kitchens somewhat more palatable.
“The ongoing moves to make the process of DIY more engaging and interesting, through range and store improvements, has also helped B&Q beat the performance of the overall market.
“That said, with the weather over the critical upcoming Easter period looking distinctly gloomy, 2013 looks like it will be another fairly bleak year for the DIY sector.”
However, Kingfisher’s Screwfix business fared well over the course of the year with total sales up 9.8 per cent to £577 million as it realises its growth strategy “despite the challenging smaller tradesman market”, the group said in a statement.
Over the year, 60 new Screwfix outlets were opened while the retailer’s redesigned catalogue and ‘click, pay & collect’ offering have also buoyed sales.
Retail profit at Screwfix, A4797|which announced the promotion of Andrew Livingston to CEO] earlier this month, rose to £47 million, up 33.9 per cent as the group maintained focus on cost control, though Kingfisher noted that the pair are increasingly operating together and announced that it will provide a single overall profit figure for the UK from next year.
Commenting on the year ahead, Cheshire concluded: “Looking ahead, although we expect market conditions to remain challenging, we will continue to actively manage the business, optimising the generation and use of cash and driving longer term success through our own actions.
“I remain very confident in our prospects, with clear initiatives underway to make it easier for our customers to have better and more sustainable homes.”