B&Q owner warns Suez blockage and COVID creating supply chain issues

·2-min read
E-commerce was a particular bright spot and 'continues to be our fastest-growing channel', B&Q owner Kingfisher said. Photo: Getty Images
E-commerce was a particular bright spot and 'continues to be our fastest-growing channel', B&Q owner Kingfisher said. Photo: Getty Images

B&Q and Screwfix parent Kingfisher (KGF.L) posted bumper sales for the first quarter of 2021 but said it will try to keep costs down despite growing pressures that are creating supply chain issues.

Shares were down roughly 1% on Thursday morning.

In Q1 2020, it made sales of £3.4bn ($4.bn), up 61.9%, which it said reflected strong demand in all categories, but also because this time last year many of its stores were closed.

E-commerce was a particular bright spot and “continues to be our fastest-growing channel”, it said, up 63% year-on-year and up 250% when compared to 2019. 

Online shopping now accounts for 21% of total sales and Screwfix was launched as an online-only retailer in France in April.

Watch: Homebound Europeans go nuts for DIY

Looking forward, Kingfisher anticipates adjusted pre-tax profit for the first half of 2020 to be ahead of previous expectations, in the range of £580m to 600m.

Kingfisher's stock was down on Thursday morning. Chart: Yahoo Finance
Kingfisher's stock was down on Thursday morning. Chart: Yahoo Finance

CEO Thierry Garnier, said: "The group delivered strong sales growth in the first quarter... this is a testament to the efforts of our colleagues, the skill and professionalism of our supply chain teams, and the responsiveness in managing daily changes within all our store operations.”

However, the company warned of risks around stock availability, driven by demand for some products where suppliers have been “challenged in keeping up with high order levels.”

This was partly due to the pandemic and the Suez Canal container ship blockage, which “continue to place a considerable strain, industry-wide, on the international logistics infrastructure”.

It is also seeing inflation pressure from certain raw materials and shipping container costs.

But it said it is “absolutely committed to remaining competitive with our prices, and are engaging with our suppliers and partners to manage the cost implications that are being felt across the industry as efficiently as possible.”

The pandemic has boosted demand for DIY supplies as people, spending more and more time indoors, look to spruce up their living space.

"The DIY craze for home and garden makeovers shows little sign of abating," said Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown.

However, she said there is "a risk that the housing market boom may start fizzling out, which could see demand for DIY products subside."

"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.’’

Watch: Bottlenecks hit soaring cargo demand 

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