Travel sector descends on foreign travel warnings and Kingfisher is still riding the DIY boom

“The travel sector is waking up on Monday to a dose of reality as cold water is poured on the idea of foreign travel for Britons this summer,” says AJ Bell Investment Director Russ Mould.

“Airlines and travel operators had seemingly refused to countenance the cataclysmic idea of another heavily disrupted summer and had been busily advertising to an increasingly inoculated UK population.

“However, the significantly slower pace of the vaccine rollout in the EU, a spike in infections in mainland Europe and the emergence of new variants has complicated the picture.

“The risk, and one being increasingly acknowledged by Government ministers, is this summer is even worse than last for the travel space as the UK keeps restrictions in place to avoid undermining its hard-won success with the vaccine.

“The likes of TUI, EasyJet, Jet2 and businesses linked to the aviation sector like Rolls-Royce were all descending rapidly this morning.

“Add to this the threat of an EU ban on the export of Covid jabs to the UK and a currency crisis in Turkey and it’s no surprise the FTSE 100 has fallen out of bed.”

Kingfisher

“Three years ago, the tides had changed for the repair, maintenance and improvement market, with DIY being ditched in favour of ‘do it for me’. People were happy to pay extra to get someone else to do the job rather than do it themselves.

“The pandemic appears to have shifted the trend back to the old ways where people are happy to roll up their sleeves and get the job done themselves.

“It’s helped that so many individuals have been stuck at home and many had a bit more time to get simple tasks completed. Others have been nervous about letting tradesmen into their property during the pandemic and so they felt they had no choice but to do it themselves.

“For B&Q owner Kingfisher this has meant a significant uplift in sales and profits, helped by its status of being an essential retailer and therefore able to keep stores open during lockdowns.

“Importantly, momentum has continued into 2021 thereby addressing a key concern in the market that people might have got DIY fatigue after a flurry of activity last year. The true test will come later this year when lockdown restrictions are hopefully removed, and people turn to outdoor pursuits.

“Kingfisher will hope that households have had plenty of time to spot what needs doing to their home and broken gates, cracks in the wall and other problems will still be fixed even when life returns to normal.

“In the meantime, a strong boost to earnings has allowed management to focus on sharpening the company’s proposition rather than having to answer questions from angry shareholders about why sales and profit were constantly falling.”

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