Figures at Kingfisher disappoint

KINGFISHER, the owner of Woolworths, Comet and B&Q, yesterday sparked concern about its low-price strategy when it reported disappointing sales figures and warned that operating margins had fallen, writes Heather Connon.

Last year, the group launched a value-for-money strategy across its chains - promoted by campaigns such as Key DIY at B&Q and Street Value at Woolworths - with the aim of boosting sales by increasing market share. It had warned that the strategy would mean that gross margins would decline, but it was confident that the increase in sales would compensate.

Yesterday, however, it revealed that Woolworths had increased sales by 3.3 per cent, excluding new space, in the 24 weeks to 15 January, while at Comet they fell by 3.3 per cent. At the interim stage, increases in these chains were running at 10.9 per cent and 4.5 per cent respectively.

At B&Q, sales were 4.4 per cent ahead, compared with 3.2 per cent at the interims. But Darty, the French electrical retailer acquired last year, suffered a 7.1 per cent fall.

The sales figures prompted analysts to cut their pre-tax profits forecasts by about pounds 15m to pounds 300m. Kingfisher's shares closed down 37p at 678p, reversing a rise before the figures were announced.

Geoff Mulcahy, chairman, said the group remained committed to its every-day-low-prices strategy.