Kingfisher dives into DIY battle: B&Q discounts herald round two of the Easter price wars
Texas Homecare and Do It All, the industry's number two and three, said they would shortly launch promotions of their own, raising the spectre of the price war that savaged DIY profits last spring.
Peter Hartley, the managing director of Ladbroke Group's Texas, which is normally the first to announce Easter price promotions, said yesterday: 'Watch this space.'
Shares of Boots and W H Smith, joint owners of the loss-making Do It All chain, fell on the news. Earlier this month DIA launched its Bonus Card, offering discount vouchers to higher-spending customers.
B&Q began television advertising last night, while a press campaign starts today, listing the discounts on a range of paint, decorating tools and materials, garden implements and other items for the summer.
Sir Geoff Mulcahy, the chairman of Kingfisher, said the lower prices were not just for Easter, but an extension of the everyday low prices strategy: 'We intend to bring prices down and keep them down.'
Kingfisher is also accelerating the opening of its larger Depot stores, which are producing strong sales growth. It now expects to exceed its 1993/4 target of 10 openings.
The group yesterday reported a decline in pre-tax profits from pounds 227.7m to pounds 210.9m in the year to 30 January. Before net exceptional costs of pounds 23.5m, profits were just pounds 1.4m above the pounds 233m forecast when it announced it was buying Darty, the French electrical appliance retailer. A final dividend of 9.5p makes a total of 13.7p, up 5 per cent. It wrote off pounds 26.4m on property development, taken as an exceptional charge. The pounds 600m property portfolio was devalued by just under 5 per cent.
Sir Geoff was cautious in his outlook. 'There are a few tentative signs that shoppers are slowly emerging from their long hibernation but they are doing so extremely warily,' he said.
Operating profits at B&Q fell from pounds 90.3m to pounds 81.1m, hit by the fierce price competition. But it gained market share in areas such as kitchens and bathrooms.
The Woolworth contribution grew from pounds 71.4m to pounds 77.8m, boosted by massive sales gains in computer games and kitchen products. Like B&Q, Woolworth is planning an aggressive price promotion, supported by its biggest television advertising campaign.
Comet, the electrical chain, more than doubled operating profits to pounds 17.7m following the restructuring that has left it almost entirely in out- of-town stores. Superdrug profits were unchanged.
Under the FRS3 accounting rules, pre-tax profits grew from pounds 195.7m to pounds 204.8m after prior-year costs were lifted above the line.
Kingfisher expects the Darty deal to be completed in early June.
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