(Sharecast News) – B&Q owner Kingfisher said it expected profits at the top end of forecasts after a sharp rise in fourth quarter sales, driven by the continuing DIY boom and online purchases during coronavirus restrictions.
Current sell-side analyst expectations for full year adjusted profit before tax are £667m to £742m, according to company-compiled consensus estimates at January 4.
Kingfisher, which also owns Screwfix in the UK and Castorama and Brico Depot in France, revealed that sales soared 16.9% in the 10 weeks to January 9, with online growth of more than 150% compared with the same period a year ago.
The company on Tuesday said it was benefiting from people looking to update their houses as they are forced to spend more time at home. Kingfisher has been given “essential” retail status in the UK, allowing its 1,380 stores to remain open throughout the second English lockdown and subsequent tiering in the run-up to Christmas.
“While the strength of our Q4 trading, to date, is reassuring, uncertainty over COVID-19 and the impact of lockdown restrictions in most of our markets continue to limit our visibility,” said chief executive Thierry Garnier.
“Longer term, we are confident that the strategic and operational actions we are taking are building a strong foundation for sustainable long-term growth. We also believe that the renewed focus on homes is supportive for our markets.”
UK and Ireland sales jumped 24% in November, and were up 20.8% in December. The end of a national lockdown in France in December also saw a sharp spike as sales jumped 29.4% compared with a 0.1% fall in November on a like-for-like basis.
The profits will include an £85m one-off gain from the pandemic chaos after taking into consideration £45m spent on making stores Covid-secure and covering other coronavirus-related costs.
AJ Bell investment director Russ Mould said the update “would suggest thousands of people trying to work from home are going to continue to hear the banging through the wall from their neighbour’s DIY projects for quite some time”.
“While its stores are currently open across its geographical territories, it does have to contend with some restrictions such as the temporary closure of B&Q showrooms across the UK, and limits on the number of people allowed inside a store in other territories. This creates some uncertainty over the pace of future sales, and so does the fact that the pandemic is still raging.
Mould said longer summer daylight hours “should provide another driver for sales as people start to think about doing up the outside of their home and working on the garden”.
“That’s a double-edged sword for Kingfisher. On one hand, it could see a new tailwind for sales, but on the other its captive audience will start to have more freedom and so the purple patch for DIY demand could start to fade as there will be other distractions in life.”
