Kingfisher-owned DIY chain manages to grow profits but blames tough retail environment and Focus clearance sale for decline in sales in H1.
B&Q UK and Ireland reported a 2% decline in sales on a total and like-for-like basis to £2.1bn for the 26 weeks ended July 30. Sales of seasonal products were down 4% for the period, impacted, said the retailer, by poor weather over the summer season and Focus DIY's stock clearance activity.

However, non-seasonal product sales were also down around 1%, which the firm attributes to tough trading conditions and a "weak consumer backdrop". Competitor Homebase also reported a fall in sales of seasonal ranges but managed to maintain a steady performance, with a slight dip of just 0.6% in sales for the first half.

B&Q grew its profit by 4.5% to £165m in H1, with gross margin up 20 basis points, driven by sales of higher margin products and the firm's push on direct sourcing.

The trade side of B&Q's business is growing at quite a pace, with around 650,000 professional tradesmen now registered as Tradepoint customers. The figure is triple the number of customers previously registered with B&Q's trade discount card.

Clearly pleased with the growing customer database, B&Q said it is now able to, "identify and directly market to this important customer segment for the first time".

B&Q parent Kingfisher also acquired 29 former Focus stores from administrators for a total of £24m. The retail group will invest a further £20m during H2 in order to convert the units into a B&Q format, as well as an £11m exceptional charge integrating the stores before they open.

Despite, what the firm described as a challenging trade market, B&Q stablemate Screwfix reported a 7.7% increase in total sales to £251m for the period. The rise counteracted B&Q's decline and meant Kingfisher UK and Ireland's overall sales were down just 1% for the first half. Profit for Kingfisher's UK and Ireland operations overall also grew by 6.1%, enhanced by a continued focus on gross margin and cost.

The introduction of new rages, such as workwear, and the addition of specialist Plumbfix and Electrifix counters in existing Screwfix branches all helped to boost sales at the 175-strong chain. During the first half Screwfix also successfully trialled a smaller format store, almost half the size of a typical trade counter at 400sq ft. The new format has allowed Screwfix access to smaller or more densely populated urban catchments, with a further 30 new outlets planned for H2 - accounting for 75% of total Screwfix new openings for the period. The new format is likely to further accelerate Screwfix's expansion beyond the second half.

Kingfisher UK and Ireland chief executive Euan Sutherland explained: "The new format opens up a lot of new locations that would not have been possible. It gives us scope to expand the Screwfix network to over 300."

Kingfisher group chief executive Ian Cheshire said: "We are backing Britain, investing to grow our B&Q and Screwfix businesses in the UK...We have the balance sheet strength and financial flexibility to do this. Although the economic outlet is uncertain, this investment demonstrates our confidence in the UK's longer-term growth prospects."