B&Q feeling hot, hot, hot?
Homebase may be struggling to make sense of itself, post-Wesfarmers (see below), but close rival B&Q is seeing some gains from its turnaround plan.
Indeed, Kingfisher Group’s Q2 figures (to end July) show reasonable growth in B&Q UK & Ireland’s sales which were +3.9% with like for likes +3.6%.
B&Q’s seasonal categories – thanks to a European heatwave – were a key driver in this modest recovery, being +7% on a like for like basis, compared to negative 6% LFLs in the previous quarter which might be attributed to the gelid, stormy “Beast from the East”.
The clement weather meant that B&Q’s sales of irrigation/watering products grew by a factor of four during Q2. It also sold more than 300,000 fans!
The seasonal boost was confirmed by IMRG Capgemini’s e-Retail Sales Index, which recorded almost 50% growth in spending on gardens in June, and 22.4% gains in July, leading to 24.5% growth YTD.
The Brits’ outdoor focus, however, came at the expense of spending on the home by the way which was recorded as negative 5.8% for the period.
B&Q’s trade facing stablemate, Screwfix, armed with a dozen new stores, saw sales +11.8% to £407million with LFLs +5.5%, as with B&Q a decent +1.9% on Q1.
Says Kingfisher Chief Executive Officer, Véronique Laury, of the results: “We started our transformation two and a half years ago and are on track to deliver our strategic milestones for the third year in a row.”
Across the Channel, Kingfisher’s Brico Dépôt France banner also delivered good sales growth, in contrast to Castorama France, whose performance was “difficult” with the result that more work is in train which should show gains for Castorama in Kingfisher’s second half.
Where to for Homebase post-Wesfarmers?
With some of the UK Bunnings stores being repainted as Homebases and many Homebase stores being closed or facing closure, the new owner is hard at work rationalising its purchase.
Having already cut jobs at head office, at least 42 Homebase stores (less than had been anticipated) will close by early next year and the retailer is also seeking massive rent cuts for 18 more stores, which could still close if these savings aren’t forthcoming.
Homebase is doing all this via a Company Voluntary Agreement (CVA), which is an insolvency procedure that has been used by firms wishing to shutter underperforming stores.
Damian McGloughlin, Chief Executive of Homebase, is reported as saying: “Launching a CVA has been a difficult decision and one that we have not taken lightly.
“Homebase has been one of the most recognisable retail brands for almost 40 years, but the reality is we need to continue to take decisive action to address the underperformance of the business and deal with the burden of our cost base, as well as to protect thousands of jobs.
“The CVA is therefore an essential measure for the business to take and will enable us to refocus our operations and rebuild our offer for the years ahead.”
Since we went to press with our September magazine, it's been reported that Homebase’s creditors and individual landlords have agreed the terms of the CVA.
It remains however that 42 stores will still close and that substantial rent cuts are still being sought on others, which may still close if the cuts are rejected by Homebase's landlords.