The exodus of refugees from Ukraine to Poland helped U.K.-headquartered home improvement retailer Kingfisher limit the damage from a return to normalcy compared to the coronavirus pandemic.
Same-store sales at Castorama in Poland surged 25.9% in the first half ending July 31, as its retail profit jumped 66% and margins rose by 2.3 percentage points.
Its Polish stores produced about three-quarters of the profits of France, which has more than double the revenue.
“The Polish market is for home improvement relatively strong because we have millions of refugees and on top of that, we are strongly gaining market share,” said CEO Thierry Garnier in a conference call, according to a transcript from FactSet.
That market, however, wasn’t enough to drive overall profit at the group higher. Its retail profit slumped 27% to £555 million ($634 million), as like-for-like sales fell 4.1%. Sales were particularly rough for its B&Q home-improvement stores in the U.K. and Ireland, where same-store sales fell 13%.
Kingfisher did say that same-store sales were 16.6% above pre-pandemic levels, and it’s now back to pre-pandemic levels for in-store product availability.
Garnier said, on net, customers in the U.K. and France are not cutting back on home improvement as electricity prices rise. “You have a small proportion of people that say ‘I delay my plan.’ But in fact, we have as well a new proportion of people that say, ‘Well, I want to invest on energy efficiency now,’” he said.
The company said it’s expecting an adjusted pretax profit between £730 million and £770 million for the year, compared to the first-half number of £472 million.
“CEO Thierry Garnier may be right when he describes the results as resilient, but the message that ‘last year was a tough ask to follow’ isn’t really one investors want to hear, no matter how reasonable an excuse it might be,” said Russ Mould, investment director at AJ Bell.