UK consumers are continuing to spend on improving their homes and gardens as an alternative to moving house, amid rising mortgage rates and rising household bills, according to the owner of B&Q and Screwfix.
Sales at Kingfisher’s UK and Ireland operations rose 1.7% in the six months to the end of July as homeowners bought 11% more insulation materials from B&Q to try to offset their heating bills in winter and also redecorating their bathrooms and gardens.
“As people move less, they spend more time renovating and maintaining. We have seen good demand in kitchens and bathrooms with many (bathroom) projects this year,” said Thierry Garnier, its managing director.
He added that in the UK, Kingfisher continues to benefit from a “healthy consumer” despite this year’s cost of living crisis and unpredictable weather. Sales of barbecues and outdoor furniture were affected by early spring rain, but this month’s warm weather has caused families to buy more fans and outdoor furniture than usual.
“We are seeing very good momentum,” Garnier said, suggesting that low unemployment and savings during the pandemic had protected many people from the rising cost of living.
However, Kingfisher shares fell almost 8% on Tuesday morning after the company revealed it had wiped £44m from its profit forecast for the year, saying it now expected to make £590 million after the poor performance of its Polish and French channels.
Total sales rose 1.1% to £6.9 billion in the six months ended July 31, but pre-tax profits fell by a third to £317 million amid rising costs. higher exploitation.
Garnier blamed the “challenging macroeconomic climate” in Poland for an 11% fall in sales at established stores and a 64% fall in local profits, as high inflation and rising interest rates hit consumer confidence.
In France, where sales fell 3.8% in the half and profits fell by a fifth, he said consumer confidence was being hit sharply by worries about food price inflation and worries about pension reform as well as bad weather conditions.
However, the group will open 20 additional Screwfix stores in France, adding to the nine already opened, and will expand Screwfix online to 20 European countries over the coming months. The group will open five additional Castorama stores in Poland, two fewer than planned, and will also close two experimental franchise stores in Saudi Arabia.
Garnier said Kingfisher expected DIY inflation to be lower in all countries where it operates over the coming months, due to the falling cost of some raw materials, although this would be offset by rising energy and labor costs.
He added: “Factories in Asia and China are not full, so they will have the opportunity to negotiate prices down and on top of that, fear costs will be much lower – divided by 10 more or less at from 2020.”