Kingfisher blames weak homes market for B&Q profits slump

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The problems at Kingfisher, the troubled Woolworths and Comet retailer took a new turn yesterday when it announced that profits at its B&Q DIY chain had fallen by almost a third in the six months to July.

The group blamed the fall on the downturn in the housing market, weak consumer spending and the warm summer that had deterred even die-hard DIY buffs. Trade had declined sharply following the Easter break, which is traditionally a good period for the DIY market.

Jim Hodkinson, B&Q's managing director said: "We haven't had a rush of people buying pots of paint to do up their houses. It was too wet to do anything in June and too hot to do anything in July and August."

The housing gloom caused other down-beat announcements in the retail sector yesterday. Shares in Berisford International, which owns the Magnet kitchens and bathrooms business, fell 20p to 164p as analysts reduced profit forecasts. Kingsbury, the furniture group, also warned of difficult trading.

B&Q, the market leader in Britain's DIY sector, said profits had fallen from pounds 44.5m in the first six months of last year, to pounds 31.8m in the same period this year. The company is pinning its hopes on the expansion of its larger-size Warehouse format which appeals to trade buyers as well as domestic customers. The format has enjoyed strong growth while the B&Q stores have struggled. B&Q will add three more Warehouse bran- ches this year, taking the total to 19, and plans to have a chain of 75 by 2000.

According to Clive Vaughan of Verdict Research, it is possible that the Warehouse chain will take sales from the B&Q centres. He added that the stock clearance at Texas Homecare following its takeover by Sainsbury's earlier this year, might be upsetting the market.

B&Q's figures follow equally grim news from Do It All, the joint venture between Boots and WH Smith.

In July the group reported a 6.6 per cent fall in underlying sales for the three months from April to June. Figures from Sainsbury's Homebase are expected next month.

B&Q's figures came as its troubled parent company, Kingfisher, announced a grim set of results for the six months to July. Pre-tax profits fell from pounds 88m to pounds 74.6m on sales up slightly to pounds 2.2bn. Woolworths, which saw profits fall by a third last year, reduced half-year losses from pounds 6.9m to pounds 0.9m due to improved systems and a return to competitive pricing in toys.

The company is introducing 150 new Chad Valley toy ranges in the run- up to Christmas and new confectionery products.

Comet, the electrical retailer which recorded a pounds 2m loss last year, increased half-year losses to pounds 8.7m due to increased investment in the stores. Multi-media PCs have proved successful and are stocked in 90 outlets.

Superdrug improved profits, backed by the addition of pharmacies and the shift towards higher-margin health and beauty products.

Kingfisher's shares rose 19p to 483p. They stood at 772p at the beginning of last year.

Investment Column, page 18

Share of DIY Spending

Store %

B&Q 15

Sainsbury's Homebase plus Texas 10

Do-It-All 4.5

Wickes 3.8

Great Mills 2.9

Source: Verdict Research