PA Media/dpa
London
British multinational retail company Kingfisher has revealed its yearly profit dropped by more than a third, flagging weaker demand for big purchases and rising costs following government budgets in the UK and France.
The DIY giant, which also owns Screwfix, said it was expecting around a £145 million ($187.2 million) hit this year from higher wages, taxes and inflation.
It made a statutory pre-tax profit of £307 million for the year to the end of January - 35 percent lower than the year before.
Sales edged 0.2 percent higher in the UK and Ireland, compared with the prior year, but were down 1.7 percent across the group led by a 6.2 percent decline in France.
So-called “big-ticket” items - referring to costlier things like kitchen and bathroom ranges, or larger home renovations - declined 4.4 percent year-on-year.
Kingfisher has consistently flagged that many consumers have delayed buying big-ticket items as they tightened their belts amid the higher cost of living.
Sales nonetheless picked up over the final three months of the financial year, which it attributed to new ranges and campaigns at B&Q.
Screwfix sales were stronger in the UK and Ireland, reflecting demand from its trade customers, although slowed towards the end of the year thanks to milder weather affecting demand for electrical, plumbing, heating and cooling products.
Meanwhile, Kingfisher said it was preparing to reduce costs to help offset the impact of higher wages, taxes and inflation.
The higher rate of national insurance in the UK, and equivalent tax in France, was set to add £45 million to the group’s expenses next year.
London-based Kingfisher had about 57,600 staff around the world at the end of the financial year.
Thierry Garnier, Kingfisher’s chief executive, said: “Looking to the year ahead, the recent government budgets in the UK and France have raised costs for retailers and impacted consumer sentiment in the near term.”
He said this means the company was “focused on what is in our control” like managing costs and growing its share of the DIY market.
“Kingfisher is in its best operational shape for years, and we remain confident about the growth opportunities in our business,” he said.
