The owner of B&Q and Screwfix has warned that profits will fall for the second year in a row as homeowners hold off on big projects including bathroom and kitchen refits amid a lacklustre housing market.
Kingfisher, which also owns DIY stores in France, Poland, Spain and Portugal under the Castorama and Brico Dépôt brands, expects underlying pre-tax profits to fall to between £490 and £550m for the 12 months to 31 January 2025, down 25% on the £560m analysts expected at the start of the year.
It comes after Kingfisher made underlying pre-tax profit of £568m for the year to January 2024, which was well below the £758m posted last year.
Thierry Garnier, the chief executive of Kingfisher, said that while short-term repairs, maintenance and renovation on existing homes would support “resilient demand” in the UK, the group was “cautious on the outlook for market growth in 2024”.
“We see early positive signs in housing market activity but we know there is a lag in housing activity and home improvement demand,” he said.
The group said sales in the UK were flat year on year but it was mindful of continued uncertainties facing households due to mortgage rates and the job market. In France, sales are expected to continue to fall amid weak consumer confidence, while sales in Poland are expected to improve as inflation and interest rates fall.
The statement on 2024 annual profits follows two profit warnings in the past six months after poor sales in France and Poland. The company revised its profit forecast for the year to this January down from £590m to £569m after a challenging third quarter saw sales decline by 4%. This followed a downgrade in September in which it cut its forecast from £634m in profits to £590m.
Kingfisher shares were down 2% on Monday after the results were announced, making it one of the biggest fallers on the FTSE 100.
Garnier said Kingfisher would be saving £120m of costs and “productivity gains” in the year ahead, suggesting a fall in store staff numbers, as well as improved deals with suppliers and landlords, as he said the group was deploying technology including more automated tills.
“During Covid we recruited a massive amount. When times are tougher we have to flex to demand,” he said.
The group will also be making changes at a third of its Castorama outlets in France – either shifting them to its budget Brico Dépôt brand, decreasing store size or investing to modernise.
Up to 40 more Screwfix stores in the UK and Ireland and up to 15 more in France will be opening, as well as 75 new Castorama stores in Poland. The group has also just launched its online marketplace service in France, where home improvement brands can sell direct to B&Q customers. It plans to launch the service in Poland this year.
Total sales across the business for the year, which also includes stores in Poland, were down 1.8% to almost £13bn for the year.
This was driven by its French arm, where low consumer confidence led to a 5.9% drop in underlying sales, while a weak trading environment in Poland meant that sales dropped by 9.5%.
However, UK like-for-like sales were up by 0.8%, with the business attributing this to growth in internet trade, led by strong sales from trade customers and its online marketplace service.
