Kingfisher has had a spectacular start to its new financial year with the help of its strategic plan and benefited from ongoing high demand for DIY, as well as weak comparatives in the prior year as Covid-19 took hold in Europe. Its ‘Powered by Kingfisher’ strategy, which focuses on growing its online business and taking a more localised approach to its operating model, has also allowed Kingfisher to effectively respond to changing consumer behaviour amid Covid-19. Group like-for-like (l-f-l) sales rose 64.2% year-on-year (YOY) and 22.5% on FY2019/20 (a two-year comparison) in its Q1 to the end of April.
The retailer achieved high double-digit sales growth in all of the markets it operates in apart from Poland, where lockdown restrictions resulted in the temporary closure of stores for five weeks of the period. France was a particular highlight, with sales at Castorama and Brico Dépôt rising 95.8% and 101.7%, respectively. Investing online such as the launch of a new Screwfix app also continues to pay off, as online sales grew 63% YOY and 258% on a two-year basis.
Demand for home improvement remains strong, with Kingfisher reporting that l-f-l sales in its Q2 to date (to 15 May 2021) grew 8.2% YOY, despite the reopening of leisure in the UK & Ireland (its largest market). Kingfisher has raised its profit guidance and now expects to achieve an adjusted pre-tax profit in the region of £580m to £600m for its H1.
The remainder of FY2021/22 will be more challenging for Kingfisher as it comes up against strong comparatives; the retailer expects group l-f-l sales will drop between 5% and 15% in its H2. Kingfisher plans to expand into new markets, having recently signed a franchise agreement with the Al-Futtaim Group to open B&Q stores in the Middle East, and this will help mitigate declines in its core markets. GlobalData forecasts the home improvement and gardening market in the Middle East & North Africa will grow 3.1% in 2021. Kingfisher’s ongoing investment in online, new smaller store formats (for example B&Q concessions within ASDA stores in the UK) and new ranges such as its new own-brand kitchen range, which is now available in all markets will also continue to support it.