B&Q takes a hit.
B&Q takes a hit.
While Sir Stuart Rose once commented that “weather is for wimps”, Kingfisher has more justification than most to pull this old excuse out of the hat when explaining this quarter’s weak trading results.
Easter is a bit like the DIY sector’s Christmas and is a key time for consumer activity and spending. Unfortunately, this year’s dismal weather dampened consumer demand, both literally and metaphorically. B&Q’s numbers show this with, for example, sales of nursery plants down 16 per cent on last year.
Conlumino’s seasonal consumer tracker, which looks at how people behave and what they buy over the Easter period, shows the same picture in a wider market context. Over the past two Easter periods (2011 & 2012) an average of 22.4 per cent of all consumers undertook some form of gardening activity; this year the figure fell sharply to just 9.4 per cent. The numbers for DIY activity shows a similar trend with 14.6 per cent of consumers undertaking some activity over Easter in 2011 & 2012; this year that number fell to 10.8 per cent, largely thanks to fewer people undertaking outdoor improvement and decoration. These headline numbers had a very tangible impact on the penetration of consumers purchasing various products over Easter.
Although a weak Easter has had a very tangible downward impact on B&Q, it is only one of a number of negative headwinds impacting the DIY sector. Among these, the main one is a continued lack of traction in the housing market. Although there are now signs that activity is picking up, it will be some time before they return to robust levels of transactions which are critical for a healthy DIY sector.
The other essential issue is the waning consumer interest in DIY. With many projects more discretionary, cash-strapped consumers have been willing to delay improvement and decorative activity; at the same time, a greater reluctance to undertake DIY.
While the weather was a temporal blip – and indeed Kingfisher’s post Easter numbers look far more rosy – these two underlying dynamics are structural and represent the backdrop against which B&Q, and indeed all other players, is operating. While the DIY market will eventually reach a stable and settled level, this probably won’t be until the back end of next year.
As for Kingfisher itself, although it is a victim of circumstance the company is both well run and proactive. Investments in stores, a focus on value and the continued development of ranges and services put it in a strong position to grab share and take advantage of the upturn, when eventually materialises.