Kingfisher has been hit by price hikes with the end of the handicraft boom

Kingfisher has been hit by price hikes with the end of the handicraft boom

B&Q owner Kingfisher has warned that it expects inflationary pressures to continue into the second half of 2022. Photo: Paul Faith/PA Images via Getty

Earnings at B&Q owner, Kingfisher (KGF.L) has fallen by nearly a third as the boom in pandemic home closings has ended, and price hikes are affecting household budgets.

Stocks in the FTSE 100 Index (^ FtsyThe group fell as much as 5.2% following Tuesday’s first-half results.

The DIY chain, which also owns Scrufix, reported that its pre-tax profit fell 30% to 474 million pounds ($543 million) in the six months to July 31, down from 677 million pounds a year earlier.

Richard Hunter, Head of Markets at Interactive Investor, said: “Despite the initial bounce in early trading, the stock price reaction is a clear indication of the decision investors have made, with the price down 33% over the past year, compared to a gain of 4.8%. for the broader FTSE100 index.

“The pressure is also not easing on what could be a very difficult future outlook as economic conditions continue to deteriorate – the market consensus on stocks as selling points not only to a tough time ahead, but perhaps also better prospects elsewhere.”

Sales fell 4.1% to 6.8 billion pounds in the six months to July, Kingfisher said, adding that revenue was 16.6% higher than three years ago.

Meanwhile, sales of insulation products, such as overhead insulation, jumped as people tried to cut their energy bills this winter. Across the group, insulation sales are up 70% from 2019, and 32% higher than 2021.

Read more: UK retail sales fall as inflation and energy bills pressure households

However, the company said sales were still “substantial” ahead of pre-COVID levels, adding that it was investing for “further growth” in e-commerce and expansion in Poland.

“Kingfisher has had a very resilient first half of sales,” said CEO Thierry Garnier. “While facing very strong comparisons from the previous year as well as a more challenging environment.”

The company also warned that it expects inflationary pressures to continue into the second half of 2022, despite raw material prices slipping from record highs and shipping costs slowing.

“Looking at the coming months, although trading in the year so far has been in line with our expectations, we remain vigilant against the uncertain economic outlook for the second half,” he added. “So we focus on delivering value to our customers at a time when they need it most.”

Kingfisher’s results on Tuesday reflect challenging times ahead of the British retail sector such as cost of living crisis Eats into consumer spending, companies are struggling with the rising cost of raw materials and supply chain pressures.

Separate figures showed that UK retail sales fell at the most in eight months in August as consumers cut back their spending Inflation is at its highest level in 40 yearsescalation Recession risk.

“DIY stores benefited from two main things during the shutdown. First, they were, unlike many other retail businesses, able to trade from their physical premises,” said Ross Mold, director of investment at AJ Bell.

Second, people who have stayed indoors for extended periods have looked at a tired décor or home improvement project they’ve been putting off and now decide it’s time for ‘B&Q’ as the logo indicates.

“Both of these positive tailwinds can be said to have vanished while at the same time the strong headwinds of the cost-of-living crisis have made it extremely difficult for Kingfisher to make any progress.”

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