Kingfisher beats forecasts after boost from B&Q

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The Independent Online

Kingfisher, the retail group, shrugged off fears of weakening consumer confidence yesterday with an upbeat trading statement led by its B&Q DIY chain.

Kingfisher, the retail group, shrugged off fears of weakening consumer confidence yesterday with an upbeat trading statement led by its B&Q DIY chain.

Reporting strong sales figures for the three months to 1 February, the company said its full-year profits would be ahead of market expectations.

Shares in the company, which is in the process of demerging its electricals division, soared 8 per cent to 225p as analysts upgraded their forecasts. UBS upgraded its estimate from £630m to £655m and raised its recommendation from "neutral" to "buy" with a price target of 240p.

Helen Weir, the finance director, said: "Much has been made recently of the deterioration in consumer confidence across Europe and in that respect it's encouraging to see growth coming from all of our key businesses."

Underlying sales across the group were 3.6 per cent higher than the same period last year. B&Q led the way with an 8.8 per cent rise, though this was against soft comparisons. The company, whose new chief executive is Gerry Murphy, said it was pleased with sales of flat-pack kitchens and its own-brand range of Performance Power tools, which offer low prices but high profit margins.

"It outsold Black & Decker over the Christmas period," Ms Weir said. B&Q plans to extend its own-brand range to garden equipment.

Ms Weir said the integration of Castorama, the French DIY retailer of which Kingfisher took full control last year, was on track.

Comet, the electrical chain, also did well with underlying sales up 3.5 per cent. The performance contrasted sharply with the flat growth and falling margins reported by its archrival Dixons last month.

Kingfisher said it was trying to differentiate itself from rivals such as Argos and the major supermarkets by offering several price ranges to encourage customers to trade up.

The group confirmed that it would seek to demerge its electricals division on to the London stock market by May or June.

Ms Weir addressed concerns that Kingfisher would cut the dividend as part of the demerger process, as is being done by the Six Continents leisure group. "We are very conscious of the importance of dividends to shareholders at this point," she said.

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