Kingfisher claims DIY sales slump at B&Q is slowing

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The Independent Online

The B&Q home improvement chain has continued to struggle but its parent company, the DIY giant Kingfisher, insisted yesterday that a recovery was beginning to kick in.

The company announced that a new format trialled in three of its big B&Q stores had been a success and would be rolled out across its 116 larger "Warehouse" outlets, a revamp that will cost £290m.

The DIY market has been in the doldrums for about 18 months and Kingfisher reported that in the first half of this year, B&Q underlying sales were down 5.5 per cent. That meant profits in the B&Q retail business crashed 43 per cent to £82.6m.

First-quarter sales this year were down 8.8 per cent at B&Q - in line with the previous two quarters - but the second quarter of 2006 showed a marked improvement with a 2.3 per cent sales decline.

Kitchens, kitchen appliances and tiles were strong areas in the first half, but sales of outdoor seasonal products suffered, particularly in the South-east which was hit by a hosepipe ban.

Gerry Murphy, the group chief executive, said: "The continuing weakness of the UK home improvement market has again impacted B&Q's overall sales and margin performance. However, management's action programme is now showing encouraging signs of progress."

He said B&Q should return to profit growth in the second half, when the company will also benefit from easier comparative sales figures from last year.

Three B&Q stores - at Wednesbury in the West Midlands, Bristol and Gillingham - have a new format. This has led to a double-digit rise in the average basket size, the amount customers are buying. Richard Ratner, an analyst at Seymour Pierce, said the sales uplift at Wednesbury had been about 30 per cent.

Under the refit, stores have more clearly defined shop-within-shop sections for particular types of product, room-set displays, new customer service points and more space allocated to kitchens, bathrooms and flooring. The outlets are designed to be easier for customers to navigate and there are more staff to provide advice.

Ian Cheshire, the head of B&Q, said the company was responding to the changes among customers who are demanding fancier products and more help - the "do-it-for-me" segment. "We are making the hard side harder and the soft side softer," he said, referring to the building materials side of the business (hard) aimed at the trade and goods such as bathroom fittings (soft) for DIY buyers.

Kingfisher performed much better outside the UK, though profits were still down - by 6 per cent - in its large French business. Overall group sales were up 6.6 per cent and underlying pre-tax profit fell 29 per cent to £178.5m.