Kingfisher pre-tax profits fall 20% amid B&Q closures
B&Q owner Kingfisher revealed that bottom-line profits fell by more than a fifth as it counted the cost of an overhaul, but said its "ambitious" plans were on track.
The group, which is axing B&Q stores and jobs in the UK and Ireland , posted a 20.5% fall in annual statutory pre-tax profits to £512 million as it closed shops and suffered an exchange rate hit.
But with the impact of its restructuring and currency woes stripped out, group-wide underlying profits rose 0.3% higher to a better-than-expected £686 million, helped by a robust UK performance.
UK retail profits jumped 18% to £326 million for the year to the end of January, helped by another impressive sales hike in its trade-focused hardware arm, S crewfix.
It is halfway through an overhaul to shut 65 B&Q stores and cut 3,000 jobs in the UK and Ireland under plans that will instead see it expand its burgeoning Screwfix business.
Kingfisher said the first 30 B&Q stores have already closed, the majority of which were shut in the final three months of its financial year, with remainder to go by the end of next January.
It recently unveiled plans to bolster annual profits by £ 500 million over five years, although this will come at a cost of £800 million.
Kingfisher shares rose 3% as it defied expectations for a fall in underlying profits.
But t he group said it remained "cautious" on France, where it trades as Castorama and Brico Depot, as sales have been under pressure amid weak consumer confidence and subdued housing and construction markets.
Veronique Laury, chief executive at Kingfisher, said the group's revamp will succeed in ramping up profits by "putting customer needs first".
She added: "It is an ambitious plan. However based on the solid progress so far, and the competence and enthusiasm of our colleagues, we feel very confident in our ability to deliver."
The group is bracing itself for a shake-up in the home improvement sector after rival retailer Homebase was taken over by Australian business Wesfarmers in a £340 million deal earlier this year.
Wesfarmers plans to rebrand Homebase under the Australian brand Bunnings.
Ms Laury said they were "following their plans as closely as we can" and revealed she has sent staff to Australia since the deal was announced.
Kingfisher is also preparing for the UK vote on EU membership and said teams "internally and externally" were looking at the potential impact of a Brexit.
Ms Laury was one of a raft of British business bosses who signed an anti-Brexit letter, addressed to The Times, last month.
The group's results revealed Screwfix was once again the star performer with full-year like-for-like sales surging by 15.3%, while B&Q comparable sales lifted 1.9%.
While it is shutting B&Q stores, the group is ramping up expansion of its 457-strong Screwfix chain and said it believes there is potential for around 600 outlets.
It said it opened 62 Screwfix stores on a net basis over the year to the end of January.
Russ Mould, director at AJ Bell Investment, said: "Kingfisher continues to put its own house in order but is paying a high price for the revamp."