Kingfisher supply chain challenges to last six months

24 May 2021

Supply chain challenges will continue to impact Kingfisher – owner of B&Q and Screwfix – for the next six months at least, the firm has warned.

Kingfisher told investors it made sales of £3.4bn in the first quarter of 2021, up 61.9% on the same period last year due to “strong demand in all categories” but also due to many stores being closed last year.

The company said it would work with suppliers in the coming months to “manage cost implications” as the firm faces “inflation pressure” as a result of shortages of raw materials and increased shipping costs.

“The key risks around stock availability continue to be driven by polarised demand within some of our categories, where our suppliers have been challenged in keeping up with high order levels. This has been exacerbated by challenges around the supply of certain raw materials,” it said. 

“In addition, the pandemic – together with events such as the Suez Canal container ship blockage – continue to place a considerable strain, industry-wide, on the international logistics infrastructure, in particular the cost and availability of shipping containers. We expect these challenges to continue for at least the next six months.”

However, Kingfisher added that despite the challenges “overall stock availability is gradually improving.”

“To date, we have been able to manage our supply and logistics needs adequately, and will continue to focus on availability as we progress through the key trading season,” the company added.

“As largely anticipated, we are also seeing inflation pressure from certain raw materials and shipping container costs. We are 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.”

Thierry Garnier, CEO, said: “The group delivered strong sales growth in the first quarter, with LFL sales up 64% and up by 23% on a two-year basis. 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.

“With the strong start to the year, we now anticipate first half sales and adjusted pre-tax profit to be ahead of our previous expectations. Whilst the second half of the financial year remains naturally uncertain, we continue to see supportive long-term trends for our industry and are confident of continued outperformance of our wider markets.”

In April, demand and supply imbalances were found to have pushed input cost inflation in the construction sector to a 24-year high.

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