European retail company Kingfisher has reported a drop in its first quarter profits of 29% and places some blame on challenging market conditions that had been compounded by the effects of an early Easter and unseasonably cold weather across Europe in spring this year, which resulted in weak consumer demand.
Kingfisher is the parent company of B&Q, a chain of 356 DIY stores in the UK and Ireland, which experienced a drop in its spring sales of outdoor seasonal products of over 10% during the prolonged cold spell in the quarter ending 4 May 2013. A decrease in general footfall and demand for outdoor maintenance, gardening and leisure products was said to have adversely affected the company’s financial results for a second year running. B&Q’s building products were also down and the DIY chain saw a 5.6% drop in like-for-like sales in the UK and Ireland.
The Kingfisher group, which also includes Screwfix as well as Castorama and Brico Depot in France, reported a fall in group-wide sales of 4.2% in the first quarter, while retail profits dropped by 29.2% to GBP114m. Like-for-like sales in the first week of April showed a decrease of over 15%. However sales improved towards the end of the period as conditions improved. Kingfisher is looking ahead to its key summer season and the company is ready to capitalise on any improvement in testing market conditions during the peak trading period and will focus on margin and cost initiatives.
Ian Cheshire, Kingfisher’s chief executive, is reported as saying that GBP5 billion of this decline was because of lower mortgage equity withdrawals, however he welcomed slight improvements for household budgets and the property market this year, particularly the re-emergence of first-time buyers and said:
“It does not feel like the death of the DIY market. There are the first signs of life in three years with first-time buyers getting back into the property market. If housing transactions get going again, DIY will get going again.”