B&Q owner clears out Russian products as DIY boom fuels £1 billion profit: reaction

B&Q owner Kingfisher said it had removed Russian and Belarusian products from its shelves as it revealed that profits had soared to £1 billion amid a lockdown DIY boom.

By Scott Reid and Simon Neville
Tuesday, 22nd March 2022, 10:34 am
Updated Tuesday, 22nd March 2022, 10:34 am

Bosses said extra cash would be handed out to shareholders through dividends and buying up stock to boost the share price, with £550 million returned to investors.

However, the company saw a marked fall in sales in the three months to the end of January, including a rare drop in sales at its popular Screwfix stores.

The UK-listed company, which also owns DIY stores in France, Poland, Iberia and Romania, revealed that since the crisis in Ukraine started it has removed Russian and Belarusian products from its shelves.

Shoppers returning to a B&Q branch in Scotland during summer 2020 following the initial lockdown as stores were classified as essential. Picture: Lisa Ferguson

Kingfisher said it was also in discussions with suppliers to ensure products were not being sourced from either country, saying they were “shocked and deeply concerned” at the Ukrainian invasion. The group sold its Castorama Russia business in September 2020.

Rising inflation has been managed through placing orders in bulk and taking advantage of Kingfisher’s size to secure better terms on shipping containers.

But bosses warned they expect cost pressure to continue into the current year, with inflation likely to rise further as energy and shipping costs remain high.

The shortage of products also had a small impact during the year, the company added, with raw materials for housebuilding and outdoor ranges particularly impacted.

Overall, it was a strong year for the group, with sales up 6.8 per cent to £13.2bn and statutory pre-tax profit jumping 33 per cent to £1bn in the 12 months to the end of January compared with a year earlier.

But most of the growth came in the first half of last year - as the retailer benefited from its essential retailer status while other stores were closed during lockdown periods.

In the UK and Ireland, B&Q like-for-like sales fell 5.6 per cent in the three months from August to October, and dipped 2 per cent in the three months from November to January.

Screwfix grew just 0.2 per cent and fell 4.2 per cent in the same two periods compared with a year earlier, although on a pre-Covid two-year basis both brands remain up.

Julie Palmer, a partner at Begbies Traynor, noted: “Doing it yourself does save money but supply chain issues and conflict in Ukraine mean some key materials are becoming scarce and more expensive, making doing up the home a frustrating and costly event.

“Add in global economic uncertainty related to Ukraine, and the company’s future no longer looks so nailed down.”

Richard Hunter, head of markets at investment platform Interactive Investor, said: “It appears that some of the concerns which had weighed on the share price in recent months over slowing growth can, for the moment, be put to bed.

“In particular, there was a question over whether the DIY boom peaked over the period of the pandemic as homeowners looked to refurbish their properties and, equally, that being freed from lockdown restrictions would also result in discretionary spend moving over towards holiday spend.”

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