Warm weather and housing market drive DIY sales at B&Q

B&Q owner Kingfisher reports sharp rise in sales for last three months

Warm weather and housing market drives DIY sales
David Cameron chats to Kingfisher CEO Sir Ian Cheshire on a visit to B&Q branch Credit: Photo: PA

B&Q has reported its strongest sales figures for a decade as warmer weather and the improving housing market helped Britain’s biggest DIY retailer.

Kingfisher, the owner of B&Q, said like-for-like sales rose by 10.1pc in the UK and Ireland in the 13 weeks to May 3, while like-for-likes in France, where the company owns Brico Depot and Castorama, edged up 1.6pc.

Sir Ian Cheshire, chief executive, said Kingfisher had capitalised on “more favourable weather conditions right across Europe”.

However, shares in the company fell by 6pc as sales and profits grew less than expected.

Analysts at Jefferies said Kingfisher had “over egged” promotions on its kitchens in B&Q, while Espirito Santo said there is an “absence of strategic visibility” and the “growing issue of discounter pricing at the bottom end”.

Shares in Kingfisher dropped 24.42 to 392.80p in early trading.

The company, which also owns Screwfix, reported an 18.8pc rise in retail profits to £142m.

However, this was below expectations of up to £150m and the City was also concerned by a 200bp drop in UK gross margins.

In the same quarter last year, Kingfisher was impacted by cold weather across Europe so reported a 4.7pc drop in like-for-like sales and a 28pc fall in retail profits. This meant that analysts were predicting strong results in the latest update.

Tony Shiret, analyst at Espirito Santo, said: “We are not so sure that the B&Q pricing strategy is clear enough even to management that this causal link can be adduced. Hopefully by the time that management gives its strategy here it will have some clearer idea of its positioning and intentions.”

Sir Ian said the fall in margins was due to “one time hits”. The decline was half linked to selling more lower-margin outdoor and DIY products due to the warmer weather, and half due to B&Q cutting the price of kitchens and bathrooms in promotions.

The Kingfisher said it is “faintly ridiculous” to suggest the hit to margins was due to competition from discounters such as B&M, although admitted that B&Q is taking the competition “seriously”.

“I think the reaction to the margin [decline] is more marked than is justified,” he added.

In the UK, B&Q enjoyed a 9.7pc rise in like-for-like sales while Screwfix was up 12pc.

Sir Ian said the figures represented a “very strong weather bounce” and the fact Screwfix performed ahead of B&Q reflected that “trade market continues to be stronger than the retail end”.

He added: “There are some generally encouraging signs for the next phase in the UK. The closer you are to the construction sector, the more positive that sector is. The pickup is definitely starting to feed through, but the consumer boost is coming through six to nine months after that.”

Rising employment, growing wage levels, and a slowdown in inflation “all adds up to a better spending pattern this year compared to last”, the Kingfisher boss explained.

Sir Ian said the Government’s Help-to-Buy scheme had “changed psychology” of the housing market, but has not “lit the blue touch paper” in the way some commentators have described.

“If I was in Government I would review it every three months,” he added.

Kingfisher also confirmed plans to return cash to shareholders through a £100m special dividend, which will be paid on July 25.