B&Q sales grow for the first time in 18 months
Friday, 25 July 2008
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Britain's biggest retail DIY chain, B&Q, delivered underlying sales growth for the first time in 18 months yesterday, sending shares in parent Kingfisher soaring.
However, like-for-like sales at Kingfisher, Europe's biggest DIY group, fell by 1.5 per cent, dragged down by a poor performance in China, for the 10 weeks to 12 July.
B&Q delivered a 0.2 per cent uplift in like-for-like sales, which was ahead of City forecasts and bucked the awful trading conditions in the home improvement sector. A B&Q spokesman said that the chain's new product offers had boosted sales, but conceded the warm recent weather also helped.
Britain suffered some of its wettest weather on record in May, June and the first part of July last year. Panmure Gordon analyst Philip Dorgan said: "While it seems a tad churlish to say this, just as a large proportion of the fall was weather-related, so it is true that the improvement is largely weather-related." Total sales soared at Kingfisher's UK trade businesses, Screwfix and Trade Depot, by 18.7 per cent, partly driven by 13 new store openings.
Ian Cheshire, the Kingfisher chief executive, said: "We have achieved sales growth and taken action to improve gross margins and manage costs in all our major markets. The UK market remains extremely tough, but we are trading solidly."
Shares in Kingfisher rose by 7.6p to close at 124.3p yesterday. John Stevenson, a Shore Capital analyst, said: "The excitement of positive like-for-like sales growth at B&Q has helped to drive a strong recovery in Kingfisher's share price today. However, we believe the potential risk to forecasts stems from France rather than the UK, noting the weakening GDP data, consumer confidence, housing market and cautious comments from other French operators."
In France, Kingfisher's Brico Depot chain, which targets trade customers, suffered a 4.8 per cent fall in like-for-like sales for the 10 weeks to 12 July, although its Castorama DIY chain grew comparable store sales by 3.5 per cent.
In China, Kingfisher blamed tumbling sales on the Chinese government's housing market regulations designed to tackle the property bubble in the country and it significantly scaling back on unprofitable deep discounting. B&Q China's like-for-like sales plummeted by 28.5 per cent over the 10 week period.
Kingfisher is strengthening its team in China with several internal promotions. Matt Tyson, currently B&Q managing director of operations, will become B&Q Asia chief executive in autumn. Joe Riordon is now leading the format development programme in China, while Gavin Keane has been appointed as B&Q China commercial director.
Last week, Kingfisher revealed it had poached Peter Hogsted, the chief executive of Ikea UK, to head its international division, and Kevin O'Byrne, group finance director of electricals giant DSG International, to be its chief financial officer.
Kingfisher has 850 stores in nine countries in Europe and Asia.
