Kingfisher disappoints despite turnover and profit growth

3.44 billion euro turnover

British Kingfisher – which owns B&Q, Screwfix, Castorama and Brico Depot – managed to increase its retail profit 20 % to 142 million pounds (nearly 175 million euro), slightly below its own 145 million pounds forecast. That is what its quarterly results (up until 3 May) showed.

Its turnover (2.8 billion pounds or nearly 3.44 billion euro) also remained below expectations, as analysts had expected a 7 to 8 % like-for-like turnover growth, which only turned out to be 6.1 %. France’s performance, worth nearly half of the group’s turnover, was disappointing as it only grew 1.6 % to 1.077 billion pounds.

Great Britain and Ireland perform much better with a 10.1% increase (to 1.2 billion pounds), while the rest of the world went up 6.8 % to 506 million pounds. The exchange rates have impacted the numbers, because if the exchange rates remained stable, the group’s turnover would have grown 9.2 % instead of 6.1 %.

Kingfisher has had to deal with a gross profit margin drop of 2 base points, mostly because the group has sold more outdoor and garden products, which carry lower margins. As B&Q also discounted a lot of kitchen and bathroom products, that also impacted the margins.

“Good start, but…”

Kingfisher’s stock dropped nearly 6 % after the results were published, the second strongest drop in the Stoxx600, with both analysts and investors expecting better results.

Nevertheless, CEO Ian Cheshire spoke of a “strong start to the year, capitalising on more favourable weather conditions right across Europe to achieve sales and profit growth in France, the UK and Poland, our three largest markets.” He did admit that “the growth achieved largely reflects comparisons with the very difficult start to last year”.

There was no news on how the negotiations on the purchase of French Mr Bricolage were going, aside from the fact that “things are moving along“.