Kingfisher CEO Warns of Business Rates Hike on Larger Stores

The chief executive of Kingfisher, the parent company of B&Q, has raised concerns about the possibility of an increase in business rates for larger retail stores, potentially impacting the upcoming budget.

Thierry Garnier joined other retail leaders in urging the government not to penalize large premises as part of reforms to the commercial property tax. "Big stores are very often big anchors in retail parks and in high streets, large employers in cities," Garnier stated. "So we very much hope that the larger stores won’t be penalised in the coming weeks."

Kingfisher, which also owns Screwfix and European brands Castorama and Brico Depot, recently upgraded its full-year profit outlook following strong first-half results. This positive financial performance was achieved despite a dip in B&Q's summer sales, attributed to the heatwave and subdued demand for its bathroom range, which is currently undergoing a revamp. The company noted a consumer preference for kitchen upgrades over bathroom renovations.

Shares saw a 9% increase in early trading after the UK-listed group reported a 10% rise in adjusted profits for the six months ending July 31, reaching £404 million, driven by improved margins and cost management. The company now forecasts full-year profits between £595 million and £635 million, an increase from its previous guidance of £565 million to £625 million.

Despite these gains, like-for-like sales grew by only 0.3%, and Garnier acknowledged that "the consumer environment remains mixed." Within the UK, Screwfix sales climbed 5.6% in the first half, while B&Q experienced a 2.9% decline. The latter saw an 8.1% drop in demand for "big ticket" items in the second quarter. B&Q operates 318 stores in the UK, while Screwfix has over 981 stores across the UK and Ireland.

Garnier, who is set to depart Kingfisher for a role at the Netherlands-based supermarket group Ahold Delhaize, emphasized his continued commitment to his current responsibilities. "I’m fully committed and focused on Kingfisher," he said. "The board has a well-prepared succession plan. The search is ongoing and moving at pace."

Regarding the budget, Garnier expressed that "retail is a powerful engine for growth, it is an engine of employment, and we hope the government can see it in the same way." He stressed the importance of "stability and certainty" for businesses. "For us, the number one priority is business rates," he added. "In the longer term, we need a level playing field between bricks-and-mortar and online players."

Concerns about the potential impact on larger stores have been echoed by other retail executives. Mike Ashley, the billionaire owner of Sports Direct, has stated that the government would be "simply delusional" to increase pressure on large retailers. Some firms are particularly worried that the government might raise business rates for large shops, defined as having a rateable value of £500,000 or more, to fund lower bills for pubs and music venues. John Lewis's outgoing chairman, Peter Ruis, previously commented that such a move would have "a terrible impact for all retailers."