Profits at DIY chain Kingfisher have dropped by almost a third as the boom in pandemic home improvements ends, and the cost of living squeeze hits budgets.
Pretax profits at Kingfisher, which owns the B&Q and Screwfix chains, fell to £474m in the six months to 31 July, the firm reported this morning, down from £677m a year earlier.
Sales dipped by 4% compared with the first half of 2021, when Covid-19 restrictions and the move to home working meant many households were improving their homes and gardens.Profit margins dropped as the firm tried to juggle rising raw material costs and supply chain pressures.
CEO Thierry Garnier insists the company has delivered "very resilient" sales in the first half of the year, pointing out that like-for--like sales are still 16.6% above pre-pandemic levels.
Encouragingly, Kingfisher is back to "pre-pandemic levels for in-store product availability", after supply chain problems led to gaps on shelves. The company says it is seeing good demand in 'outdoor and 'big-ticket' category sales.
But Garnier also warns that Kingfisher – like the wider retail sector – faces economic uncertainty: "Looking to the months ahead, although trading in the year to date has been in line with our expectations, we remain vigilant against the more uncertain economic outlook for the second half.
"We are therefore focussed on delivering value to our customers at a time when they need it most."
Kingfisher's falling profits is the latest sign that Britain's retail sector is facing tough times.
Last week, Wickes flagged that the pandemic-fuelled DIY boom has significantly slowed, while John Lewis made a first-half loss of £99m and warned the outlook in the run-up to Christmas was "uniquely uncertain".
With the mini-budget looming on Friday, Labour are asking who will pay for Liz Truss's tax and spending plans.
Pat McFadden, the shadow chief secretary to the Treasury, highlighted the difference between Labour's proposals to fund an energy price freeze with a windfall tax on oil and gas companies and the Conservatives' unfunded plans.
He said under the Tory proposals, which will probably be paid for by borrowing, "working people will be left paying the bill for years to come" and the "fundamental question which remains unanswered on this is who pays, and what do you get for it?"
The London stock market is due to open higher, after being closed yesterday for the bank holiday to mark the funeral of Queen Elizabeth.
Investors are focused on central banks, with the US Federal Reserve expected to raise interest rates sharply again on Wednesday, and the Bank of England likely to follow suit on Thursday.
The agenda • 7am BST: German PPI factory prices for August • 8.30am BST: Sweden's Riksbank interest rate decision • 1.30pm BST: US housing starts and building permits • 1.30pm BST: Canadian inflation for August
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