UK: B&Q sales catch a chill during prolonged cold-snap
DIY chain B&Q saw spring sales of outdoor seasonal products plunge by more than 10% as the retailer was hit hard by the prolonged cold spell.
Takings on building products were also down in the quarter to May 4 as the DIY chain suffered the twin effects of weak consumer confidence and the bad weather earlier in the year.
The slump in outdoor product trade, which contributes nearly a third of first-quarter total sales, left B&Q nursing a 5.6% drop in like-for-like sales in the UK and Ireland.
Parent company Kingfisher, which also owns Screwfix as well as Castorama and Brico Depot in France, said group-wide sales fell by 4.2% while retail profits nosedived by 29.2% to £114 million in the quarter.
The overall group saw like-for-like sales in the first week of April down by more than 15% and is now pinning its hopes on a better summer.
Chief executive Ian Cheshire said challenging market conditions had been compounded by the effects of an early Easter and unseasonably cold weather across Europe.
He said the bad weather in March accounted for the vast majority of the quarter’s profits decline, though sales improved towards the end of the period as the weather got better.
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“Looking ahead, we still have our key summer season to come and we are ready to capitalise on any improvement in conditions during this peak trading period,” Mr Cheshire said.
Kingfisher has more than 1,000 stores worldwide, including 356 B&Q outlets in the UK and Ireland employing nearly 22,000 people.
Greenhouse sales at B&Q were down 52%, while bedding plants were off 8%. Tiling sales, unaffected by the poor weather, were up, while kitchen and other indoor products also performed well, Kingfisher said. However, bathroom sales fell amid discounting by rivals.
Mr Cheshire played down concerns among some analysts that the business is affected by deeper structural problems, saying it was already taking steps, such as reducing space in its stores while maintaining sales.
He took a swipe at rivals such as Homebase, which recently offered a 15% discount over the Bank Holiday weekend, saying B&Q would rather offer lower prices across the year.
He added that suggestions that a shift from “do it yourself” to “do it for me” (DFM) would damage B&Q were wide of the mark as the store would always offer a mixture of the two, though he rejected the idea that “DIY’s dead”.
Mr Cheshire said he remained positive over the outlook for the full year, particularly with “encouraging glimmers” from the housing market likely to benefit the business.
He said the latest figures represented a “very tough quarter” with March representing the bulk of the profits miss.
“If we don’t get any other unexpected bumps for the rest of the year, we are in a reasonable shape,” he said.
Richard Hunter of Hargreaves Lansdown stockbrokers noted that even though the profit fall was expected, the bottom-line figure of £114 million was well below the forecast of £140 million.
He said: “The company did highlight an improvement in fortunes towards the end of the quarter, even if much of the damage had already been done.
“The importance of the summer season now becomes more marked for the company, and any continued downturn in the weather will put extra pressure on the shares.”