B&Q owner Kingfisher has revealed annual profits slumped by more than a quarter and warned over another steep fall in earnings this year as it overhauls its French arm to help revive its fortunes.
The group reported a 25.1% drop in underlying pre-tax profits to £568 million for the year to January 31.
Kingfisher, which owns the Screwfix chain and brands including Castorama and Brico Depot in France, said like-for-like sales tumbled by 5.9% in France and 7.7% elsewhere across Europe.
It said the UK and Ireland saw a more resilient performance, with sales up 0.8%, leaving overall group-wide sales down 3.1%.
The group has pared back sales declines so far in its new financial year, to a fall of 2.3%.
But it warned that profits are expected to drop again, to between £490 million and £550 million in 2024-25, below the £560 million pencilled in by analysts.
It comes after the firm had already warned over profits twice last autumn for the year just gone as a pull back on consumer spending on DIY and a housing market downturn has added to its woes across Europe.
Kingfisher announced a turnaround plan for its beleaguered French arm, signalling job cuts as part of an overhaul that will also include a store restructuring and shop revamp plan to help boost its flagging performance in the region.
Thierry Garnier, chief executive of Kingfisher, said the group was trimming its 58,781-strong workforce, particularly as part of the French overhaul, but declined to say how many jobs would be impacted.
It employs 17,698 in France while it has 25,106 staff in the UK and Ireland.
He said the group ramped up hiring during Covid and the DIY boom, but has since been rowing back as sales have waned.
“We massively recruited in 2020 and 2021 – when times are tough, that’s your job to flex your headcount to the demand,” he said.
The firm said many of the cuts would be accounted for by staff turnover, with its so-called churn standing at about 30%, though it said this was below others in the retail sector.
Kingfisher said the changes marked a “clear plan to take France to the next level” and “significantly improve the performance and profitability of Castorama”, with plans to cut the space of some stores, having identified around a third of the 95-strong chain as being the lowest performing.
It has already cut costs across the group by around £350 million in recent years, with about another £120 million in savings set to be made over the year ahead.
The group hopes this will go some way towards offsetting higher wages and spend on IT, including AI to improve product stocking.
But in the UK, it is planning to open up to 40 new Screwfix stores in the year to next January, while it is also expanding the chain across France and opening stores under the Castorama brand in Poland.
Mr Garnier said: “Despite all the macroeconomic and consumer challenges in our markets over the past year, we have stayed focused on our customers and our long-term strategy.”
He added: “In the short term, while repairs, maintenance and renovation activity on existing homes continue to support resilient demand, we are cautious on the overall market outlook for 2024 due
to the lag between housing demand and home improvement demand.
“Against this backdrop we will remain agile and focused on what is within our control – leveraging our strategy to deliver market share growth, driving productivity gains, and managing our costs and cash effectively.”
Enjoy the convenience of having The Sunday Post delivered as a digital ePaper straight to your smartphone, tablet or computer.
Subscribe for only £5.49 a month and enjoy all the benefits of the printed paper as a digital replica.
Subscribe