Screwfix owner Kingfisher suffers ‘big-ticket’ spending crunch

  • Kingfisher’s turnover rose by just 0.3% at constant currency levels to £3.3bn
  • In the UK and Ireland, the Screwfix owner’s revenue grew by 2.7% to £1.63bn

Kingfisher saw first-quarter sales flatline as customers cut back on purchases of ‘big-ticket’ items, with the home improvement sector proving slow to recover.  

Screwfix’s parent company reported turnover rose by just 0.3 per cent at constant currency levels to £3.3billion in the three months ending April and fell by 0.9 per cent on a like-for-like basis.

Demand benefited from resilient sales of core products, which provide two-thirds of Kingfisher’s total business, and growing orders of seasonal goods despite rainy weather in April.

Flatlining: Screwfix’s parent company Kingfisher reported turnover rose by just 0.3 per cent at constant currency levels to £3.3billion in the three months ending April

In the UK and Ireland, the firm’s revenue grew by 2.7 per cent to £1.63billion, mainly due to gains in market share and trade customers at its Screwfix business.

However, like-for-like sales from big-ticket categories, including kitchen, bathroom, and storage products, declined by 6.3 per cent following poor performances by French brand Castorama and B&Q in the UK and Ireland.

Over the past two years, interest rate hikes across the UK and Europe have made mortgages more expensive, suppressing the appetite for property renovations.

This came after a pandemic-induced boom in activity caused partly by the surge in people working remotely and harsh restrictions on socialising with people from other households.

Covid-19 also encouraged many Britons to leave big cities like London in search of more spacious properties, further spurring interest in home refurbishments.

Kingfisher’s annual revenues climbed by about £1.7billion to £13.2billion between 2020 and 2022, but have slid back since then amid elevated inflationary pressures.

In the most recent financial year, its turnover decreased by 1.8 per cent to £13billion, while profits slumped by 26.7 per cent to £345million.

Thierry Garnier, chief executive of Kingfisher, said the business was cautious regarding the market outlook for 2024 due to the ‘lag between housing demand and home improvement demand’.

Consequently, Kingfisher has kept its annual guidance the same, with adjusted pre-tax profits of around £490million to £550million and free cash flow of £350million to £410million expected.

Yet the property renovation sector could receive a significant boost if central banks decide to cut interest rates later this year, as many analysts expect. 

Adam Vettese, an analyst at eToro, said: ‘As the macroeconomic situation begins to ease…conditions should start to improve for retailers such as Kingfisher as a home improvement budget is back on the table for many households.’

Kingfisher shares were 0.95 per cent lower at 261.6p on late Tuesday morning and have grown by around 9 per cent since the year started.