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BQ owner to update outlook for DIY sector amid income squeeze

todayNovember 20, 2022 8

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B&Q owner to update outlook for DIY sector amid income squeeze

B&Q owner Kingfisher is set to reveal how the DIY sector is faring as consumers face squeezed household budgets and the housing market slows.

The FTSE 100-listed firm will give shareholders an update on its trading over the latest quarter on Thursday, and investors will be looking eagle-eyed at the company’s outlook for home improvement retailers.

Kingfisher, which also owns tools retailer Screwfix, reported sliding profits in its half-year results in September, as it battled higher costs and the pandemic DIY boom deflated.

The company is exposed to supply chain disruption, which has been strained since Brexit, the pandemic and the war in the Ukraine, particularly hitting the cost and supply of raw materials like metal and plastic.

It noted that supply strains had eased up since peaks earlier in the year, but investors will want to see an update on how the business has managed cost inflation since, and whether it has had to pass on price rises to customers.

Furthermore, the DIY giant is likely to shed light on how sales have fared as many households are more mindful of spending during the cost-of-living squeeze.

Analysts suggest that some big home improvement projects may have been put on ice while people make “hard choices” about their spending.

Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown, said: “Cost-of-living pressures are expected to show up in B&Q owner Kingfisher’s update as consumers make hard choices about how to spend their money.

“The big boom in DIY home which played out during the pandemic has been fading.

“Now, with mortgage payments rising, and food and energy bills soaring, there is likely to be less disposable cash around and borrowing may be more difficult for major projects.

Ms Streeter added that the group may be impacted by a slowdown in the housing market, if it reflects people putting off moving and therefore delaying putting their stamp on a new property.

She added: “However, there could be some benefit could come from people opting to make small changes in current homes, instead, and demand for energy-saving products like loft insulation is likely to stay strong.

“B&Q like other retailers has already been hit by higher energy costs which have eaten into margins but any sign that supply chain issues are continuing to ease will be well received given the problems snarl ups have caused.”

Shares in Kingfisher have tumbled throughout the year by about 30% as the retailer came off the highs of the pandemic DIY boom.

Published: by Radio NewsHub

Written by: admin

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