Kingfisher continues to benefit from consumers staying home

GlobalData Consumer 17 June 2020 (Last Updated June 17th, 2020 15:17)

Kingfisher continues to benefit from consumers staying home

Kingfisher reports a strong start to its Q2 (six weeks to 13 June), boosted by ongoing elevated demand for home improvement as consumers stay home, and the phased reopening of stores since mid-April. In the UK & Ireland, l-f-l sales rose 15.5% in May and 26.3% in the first week of June.

The DIY specialist has outlined its new ‘Powered by Kingfisher’ plan, which will focus on seven key strategic priorities, including growing online sales, partly through shifting to store-based picking and fulfilment. Ongoing investment in online is wise given that many DIY shoppers will continue to favour this channel for the foreseeable future – a recent GlobalData survey revealed that almost one-third of shoppers (31.6%) say they would not consider visiting a DIY store that has reopened due to hygiene concerns and the prospect of having to queue.

Kingfisher also plans to experiment with new store concepts, including concessions and smaller-format stores (though no reference was made to its small-format GoodHome fascia, which first opened in the UK in May 2019). Kingfisher’s new store concepts will help it compete with Homebase, which has concession partnerships with brands including Silentnight, Ponden Home and Bathstore, and recently opened its first two ‘DECORATE by Homebase’ smaller-format stores.

Following the FCA’s request to delay publication of its final results for FY2019 / 20 ending 31 January, Kingfisher today reported that group adjusted profit before tax declined 5.2% to £544m. Retail profit fell 4.6%, with retail profit margin declining 30bps to 6.8% for the year to 31 January 2020. As part of its new ‘Powered by Kingfisher’ strategy, the retailer plans to simplify its operating model, unify its product ranges and develop its ‘own exclusive brands’ to aid profitability in FY2020 / 21.