Have Brits fallen out of love with DIY? B&Q and rival Wickes eye lower profits after costs soar and demand dwindles

B&Q owner Kingfisher and rival Wickes are set to reveal falls in profits over the past year as surging costs dampen the outlook for the home improvements market. 

Kingfisher, which runs B&Q and Screwfix, has previously indicated its sales and profits have weakened over the past year, as it also saw DIY demand from locked-down customers start to soften.

The London-listed firm is expected to reveal pre-tax profits between £730m and £760m for the year to January when it updates investors on Tuesday.

It comes after Kingfisher cut its previous estimate of £770m in its latest update in November.

Moreover, operating profit plunged almost 30 per cent in interim results to the end of July 2022, the DIY retailer highlighted last summer. 

Investor confidence in the listed retailer also slumped 2.67 per cent this morning as the market gears up for its results update this week. 

During the update to shareholders, Kingfisher had highlighted a marginal rise in sales over the quarter to October and hailed a “good start” to the final quarter.

Post pandemic DIY demand eases

However, the group is still likely to deliver a decline in like-for-like sales for the full year after the start of the year failed to keep up with pandemic-boosted demand.

Analysts have predicted a 2.1% like-for-like fall in sales, with a roughly flat performance over the second half of the year.

But investors are likely to look further forward amid worries that continued inflationary pressure and weakness in the housing market could further weigh on demand.

Analysts have predicted another decline in like-for-like sales and profits for the new financial year so shareholders would welcome an improved outlook and growth strategy on Tuesday.

AJ Bell investment director Russ Mould said: “Shareholders and analysts will then look for an update on the Powered by Kingfisher programme and the financial priorities outlined by chief executive Thierry Garnier as part of the plan.

“They will look for sales growth faster than the overall market, profit growth in line with and then faster than sales growth and strong free cash flow.”

Meanwhile, rival Wickes has seen a more positive trajectory, which has helped shares improve by around a fifth since October.

In January, the business revealed that like-for-like sales grew by 5.2 per cent over the fourth quarter of 2022 as households rushed to buy energy-saving products to help cut soaring power bills over the winter months.

Nevertheless, it is still coming under pressure from continued cost pressures and predicted its gas and electricity bill will rise by another £10m in 2023 despite wholesale energy prices cooling.

The firm is expected to report pre-tax profits of between £72m and £76m  for 2022 on Thursday, down from £85m  in 2021.

Investec analyst Kate Calvert said: “Focus will be on the outlook for 2023, which looks set to remain challenging.

“The market will be looking for views on stability of underlying markets, top-line price inflation and confirmation that cost inflation assumptions are in the right place.”