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Small builders beat the DIY trend at Howdens

A slump in DIY has hit B&Q owner Kingfisher but a trade-only business aimed at small builders has enjoyed a stronger half year.

Howden Joinery said it sees scope to add over 100 joinery depots to its 576 strong chain across the UK on the back of an 11.6% increase in sales and improved profit margins.

But Kingfisher’s shares slumped 8% as it revealed weaker than expected trading in many of its markets, and was unable to say why.

The company has been hit by softer trading in France and Poland, while revenues at B&Q were down by 3.2% on an underlying basis in the 10 weeks to July 12 as sales of outdoor and seasonal products slumped 8% on a year ago.

Chief executive Sir Ian Cheshire said the quarter was always expected to be difficult after good weather brought forward sales into the previous quarter and the company came up against tough comparisons with last year.

However, he added: “Our markets in the second quarter, notably in June, have been slower than anticipated particularly in France and Poland.”

Freddie George, an analyst with Cantor Fitzgerald suggested that the distraction of the World Cup, which led to weakness in many home categories, was another factor in the disappointing performance.

Howden’s half year update to the June 14 measured the period in the run up to the Brazilian football event.

But the company said its improved trading conditions seen since last summer had continued, adding that it has opened new depots and increased turnover continuously, except for a 12-month period in 2008-9 since it launched in 1995.

The firm is also taking a tentative step into B&Q’s territory in France when it opens a larger unit that is open to both trade and retail customers. In the period it made £7.2million in sales in France, compared to £435.4million in its core UK base. It also plans to open two new stores in Belgium this year, as well as a further 30 stores in the UK in the same time. In total it expectes to have 700 UK outlets.

Kingfisher is the world’s third largest home improvement chain, with 1,134 stores in nine countries in Europe and Asia. Its main retail brands are B&Q and Screwfix in the UK and Ireland and Castorama and Brico Depot in France.

Screwfix sales grew by 11.8% on a like-for-like basis but the supplier of tools and hardware products, which trades from 356 sites, failed to prevent overall UK and Ireland underlying sales falling by 1.3% in the quarter.

The stronger first quarter meant overall UK and Ireland sales rose by 7% overall and by 4.7% on a like-for-like basis in the year to date.

Underlying sales in France were down 2.2% in the quarter, driven by a decline of 3.8% at Brico Depot due to a slower housebuilding market.

Source: Erikka Askeland - The Press & Journal

25 July 2014

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Thank you for the excellent presentation that you gave at Woodbury Park on Thursday morning. It was very interesting and thought-provoking for our Retail members. The feedback has been excellent.

Martin Elliott. Chief Executive - Home Hardware.

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