B&Q owner blames weather for falling profits
on 12/09/2012 08:23:32
The FTSE 100 Index company, which also owns tools supplier Screwfix as well as Castorama and Brico Depot in France, said record rainfall in the UK and northern Europe helped prompt a 7% drop in seasonal product sales in the 26 weeks to July 28.
B&Q in the UK and Ireland suffered a 6% like-for-like decline in sales to £2bn (€2.5bn) as average footfall plunged 20% in the severely weather-affected weeks.
The wider group reported a 17% slide in bottom line pre-tax profits to £364m (€455.6m) in the period as sales dipped 3% to £5.5bn (€6.88bn).
Chief executive Ian Cheshire said: "This has been a tough first half with unprecedented wet weather throughout the key spring and summer seasons in northern Europe.
"This affected footfall and demand for outdoor maintenance, gardening and leisure products, which normally account for a significant proportion of our first half sales."
MeteoGroup, the weather division of the Press Association, has said 14.25in (362mm) of rain fell in June, July and August, making it the wettest UK summer since 1912.
The group said the cost of accelerating its national rollout of new common own brands in the UK cost around £10m (€12.5m) in the period, while it also took an exceptional charge of £5M (€6.25m), relating to streamlining support offices.
Kingfisher group retail profit in the UK and Ireland declined by 20% to £145 million, reflecting weak seasonal sales and additional markdowns to clear seasonal stocks.
At B&Q, sales of building products were hit by the adverse weather, while sales of indoor decorative products were up as customers switched some of their home improvement activities indoors. The chain saw retail profit slide 24% to £125m (€181.5m).
Screwfix grew total sales by 9% to £273m (€341.7m), driven by the continued rollout of new outlets and the recent introduction of a mobile "click, pay & collect" service.
The chain opened 25 new outlets in the first half, taking the total to 240, with retail profit jumping 19% to £20m (€25m).
In France, retail profit was down 5% at €239m, while sales fell 6% to €2.75bn.
There was some cheer for investors as the group raised its interim dividend by 25% to 3.09p.
Matthew McEachran, retail sector analyst at Singer Capital, said the results were below expectations and downgrades to full-year forecasts were "inevitable".