“The DIY craze for home and garden makeovers shows little sign of abating with sales at B&Q owner Kingfisher surging by 62% in the first quarter.
Q1 2021 hedge fund letters, conferences and more
B&Q Q1 Earnings
The first shock of lockdown saw sales plummet at the group during the same period last year which accounts partly for this rapid rise, but compared to 2019, sales were up by 23% across the group.
People rolled up their sleeves and got stuck into home improvements during the third lockdown with sales at B&Q soaring by 82%. Shoppers splurged on projects to prepare for social life resuming outside come rain or shine. Sales of weather related products in B&Q were up 129%.
E-commerce sales got another boost, up 63% on the year but by 258% compared to the same period in 2019. It shows just how dramatic the shift to online shopping has been and how nimble the company has been in adapting its operations to meet demand, across all of its brands including Screwfix and French chains Castorama and Brico Depot.
The fact that it launched Screwfix as an online only retailer in France in April shows its keeping digital in razor sharp focus going forward.
But shares fell by 1.5% in early trading amid concerns about rising prices and supply bottlenecks issues.
Supply Chain Delays
It’s not just the pandemic which has put a spanner in the works of supply chains, but the Suez Canal container ship blockage has also led to delays. There are signs of improvement in cargo deliveries but the shadow of inflation is being cast over future profits given the rise in shipping costs.
Although uncertainty still reigns about the prospects for the full year, the company still says sales for the first half and adjusted pre-tax profits should exceed initial expectations.
The home-working revolution is likely to keep boosting demand as people hunker down for the longer term and are forced to find new ways of using space. There is though a risk that the housing market boom may start fizzling out, which could see demand for DIY products subside.
But there seems little prospect of people downing tools in the immediate future, but they could be frustrated at the lack of choice on the shelves if supply issues aren’t fully ironed out soon."
Article by Susannah Streeter, senior investment and markets analyst.
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