More bad news for high street as JJB and Kingfisher hit by slowdown

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The Independent Online

A collapse in spending at JJB Sports sent the chain's shares down nearly 11 per cent yesterday, as the retail sector was hit by more bad news which included another downbeat trading statement from Kingfisher, the owner of B&Q.

A collapse in spending at JJB Sports sent the chain's shares down nearly 11 per cent yesterday, as the retail sector was hit by more bad news which included another downbeat trading statement from Kingfisher, the owner of B&Q.

JJB has suffered a decline in sales over the past six weeks. In mid-April the company warned that trading in the 10 weeks to 13 April was down 1.3 per cent compared with the same period a year ago.

Since then, the decline has accelerated to give a 7.7 per cent average decline in like-for-like sales for the 16 weeks to 22 May. Brokers responded by slashing their profits forecasts for the company by one-fifth, cutting the expected earnings figure to £45m to £49m, from an average of £63m.

David Whelan, the chairman of JJB, warned: "In my statement of 13 April, I said trading conditions were as difficult as any that I had known for a number of years. I believe that these conditions will continue to deteriorate with the impact of higher interest rates and taxes ... and that the low level of confidence among consumers is going to take some time to reverse."

Last summer the company's sales of replica kits were boosted by Euro 2004, but there are no major championships this summer. The only upbeat news from JJB was on its health clubs business, where new memberships were said to be "very positive".

At Kingfisher, Gerry Murphy, the chief executive, said B&Q sales fell 7.7 per cent to £1.04bn, and profits at the home improvements chain slid 16.5 per cent to £73.2m. The chain is being hit by lower customer numbers rather than falling average spend. Its French chain, Castorama, was hit by a 27.3 per cent fall in profits to £20.2m, while sales were off 4.4 per cent to £382.3m.

Mr Murphy said: "It is too early to judge the outlook for the full year. However, trading in the first three weeks of our second quarter continues to be challenging in the UK and France. Though current trends are adverse, Kingfisher companies will continue to offer great products and great prices to attract customers to our stores."

Across the group, which includes Screwfix Direct and Brico Depot in France, like-for-like sales were down 5.6 per cent, retail profits were down 15.6 per cent to £125.9m and net debt rose to £753.7m from £510.9m.

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