Kingfisher’s half year trading update has left investors with mixed emotions.
The home retail giant, which owns DIY chains B&Q and Screwfix among others, revealed a 1.8% fall in first half profits, after a disappointing performance for outdoor seasonal goods in the peak summer season. But recently appointed CEO Veronique Laury said she was “pleased” with a “solid first half of the year.” This is based on the progress of the ‘One Kingfisher Plan’, which is designed to unify and consolidate the different aspects of the group to create a “single unified company where customer needs come first.”
The company has assured shareholders that the turnaround is going favourably, revealing plans to embark on an aggressive Screwfix expansion plan, cashing in on the rising employment of tradesmen in the home as home owners reject the notion of ‘do it yourself’.
In contrast to B&Q, whose store count will reduce by 60 over the next two years, the Screwfix arm of the business saw like-for-like sales jump 16.5% thanks to a booming housebuilding sector.
Part of the company’s ‘strong’ performance has been trimming the fat, on track to close 15% of its B&Q stores by the end of the 2016/17 financial year. There has been speculation that the group may phase out the B&Q brand name.
CFO Karen Witts was more defensive of the results themselves, saying: “Our balance sheet remains strong, enabling us to continue investing for growth and to return so far this year, £160m via share buyback. We are also today announcing growth in the interim dividend, ahead of earnings, reflecting our confidence in our medium term prospects.”
“I am pleased with the progress made to exit most of the B&Q stores earmarked for closure this year,” Witts continued, “which will in time strengthen our balance sheet and maintain our financial flexibility.”
“There remains a lot to be done.” Laury admitted. “Our leadership team is now complete and we are continuing to develop our detailed plans at pace as we progress on this exciting journey. We look forward to updating on further progress along the way.”