B&Q owner Kingfisher expects £175m profit boost due to Covid-19 support and cost savings
B&Q owner Kingfisher expects to report an extra £175m profit for the year due to temporary cost savings, including government Covid-19 support measures.
The London-listed DIY firm said today that sales soared 17.6 per cent to £3.5bn in the third quarter due to a surge in people beginning home improvement projects during the pandemic.
Kingfisher returned the £23m it claimed under the government’s furlough scheme while its stores were closed during the first UK lockdown.
However it said other support measures and cost savings would result in a £175m profit before tax boost for the year.
The company has benefited from £110m of business rates relief during the year.
Meanwhile, Covid-related costs are expected to reach £45m, up £5m from previous guidance.
Kingfisher, which also owns Screwfix, said its third quarter performance was “reassuring” but warned over continued coronavirus uncertainty and the impact of temporary lockdown restrictions.
However it said the “renewed focus on homes is supportive” for its markets, as lockdowns have prompted more people to tackle DIY projects.
Analysts said the brand had boomed during lockdown, but recent vaccine research breakthroughs could mean it will struggle to replicate the success when normality resumes.
Julie Palmer, partner at restructuring firm Begbies Traynor said: “Kingfisher is one of the winners of lockdown and the series of restrictions that have left people largely confined to their homes.
“As people spent more time staying in and less money going out many started making home renovations.
“This resulted in a boom for both Screwfix and its long suffering sister-brand B&Q. But with increasingly positive news about a vaccine Kingfisher is in the odd position of having to discover how it replicates its lockdown performance.”
Richard Hunter, head of markets at Interactive Investor, said: “There is a strong potential for pent-up demand in consumers choosing to travel again, rather than funnel time and money towards home improvements.
“At the same time, while the home working environment could be here to stay in a limited capacity, there will be some form of a return to the office which will again impact future prospects for the likes of Kingfisher.
“Even so, the company is clearly making hay while the sun shines and has been able to capitalise on the current environment.”