Kingfisher has sold a dozen of its B&Q outlets to discounter B&M, according to analysts, after another tough quarter for the DIY chain.
Sales at B&Q’s UK and Irish outlets slid 1.5% in the 13 weeks to the end of May as sales of seasonal outdoor and building products dropped 4% compared to a strong period last year.
“We have made a solid start to the year against strong comparatives,” said chief executive Véronique Laury, who said the volume of goods sold at B&Q had risen despite the value of sales falling.
She said Kingfisher had sold the leases of 14 of the 60 stores it wanted to offload in March this year. The company said two different national retailers had agreed to take on the stores over the next two years, but did not confirm their names. However, analysts suggested B&M had bought a dozen of the stores.
Tony Shiret, an analyst at BESI, said B&M was the main buyer of the sites and suggested the fast-growing discounter chain could present a growing challenge to B&Q.
“Kingfisher management believes that B&M is no real threat to B&Q with a limited overlapping range. While true of the current majority of B&M stores, the largest ones carry, in our view, a very credible range of DIY, low-end furniture and, to a lesser extent, garden products,” Shiret wrote in a note.
Both the UK’s traditional DIY chains – B&Q and Homebase – are closing dozens of stores amid changing shopping habits. DIY stores face competition from a growing number of specialist online rivals, such as Toolstation and Victoria Plumb, as well as discounters like B&M, Home Bargains or even Lidl and Aldi. Many younger people lack the skills to put up shelves or tile the bathroom, and DIY has fallen out of fashion. Many prefer to hire professionals for painting and wallpapering so they can spend their own time on leisure activities or buying clothes.
Kingfisher’s quarterly sales figures, released on Thursday, echoed that trend. While sales at B&Q were down, those at Screwfix, which is aimed at professional builders, soared almost 27%. The chain opened new outlets and extended ranges.
That performance, and a sharp jump in sales in Russia of 38.9%, helped lift quarterly retail profits by 1.4%.
Kingfisher said Russians were splashing out on expensive durables that would hold their value, such as kitchens, bathrooms and power tools “in an uncertain market”.
In France – where the company trades as Castorama and Brico Dépôt – sales were up 0.4%, which the company attributed to a “soft market”.
Laury, who took over the helm last September, insisted the year had started positively for Kingfisher.
“In the UK, B&Q continued to grow sales volumes and Screwfix delivered an excellent performance, opening its 400th store in May. In France, our businesses performed broadly in line with the market,” she said.
It emerged last December that the company was going to sell a 70% controlling interest in B&Q China after finding it difficult to interest the country’s middle class in home improvement.
The company said on Thursday that the stake had been sold to a Chinese buyer for £140m.
Meanwhile, B&M’s annual sales rose by 29.5% to £1.65bn, helping to boost underlying pre-tax profits, which rose 55.7% to £135m in the year to 28 March. Last year, the group opened 52 stores in the UK and bought a stake in the German chain Jawoll, which has 49 stores. It said it expected to open 60 new outlets this year.
