Statement likely from Kingfisher

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The Independent Online
KINGFISHER, the stores group, is expected to issue a trading statement in the wake of the shock revelation from Dixons last week that it had badly miscalculated over Christmas demand for computer games consoles.

Investors fear that Kingfisher's electrical chain, Comet, may also have been badly hit by the savage price cutting of Sega and Nintendo hardware in the run-up to Christmas.

The group's share price has been marked down 33p to 729p in the two trading days since Dixons announced its disappointing sales. Kingfisher is thought likely to go ahead with a statement, possibly as early as this week.

Unlike most retail groups, it does not normally issue a sales bulletin after Christmas. However, it has been considering doing so to meet tougher Stock Exchange guidelines on keeping shareholders informed and preventing false markets.

The uncertainty triggered by the Dixons announcement has added to the pressure to publish sales information. Kingfisher is also exposed to the computer games market through its Woolworth subsidiary, which is a big retailer of games software.

However, most analysts believe Kingfisher will have been less badly damaged than Dixons because Comet accounts for a small proportion of group profits.

Other parts of the group may also have benefited from the switch of consumer spending out of computers. WH Smith, for example, reported that customers were moving spending out of computer games back to more traditional areas such as recorded music.

Unless it issues a statement, shareholders will remain in the dark until 26 March, when it is due to report its results for the year to 26 January.

Prices of computer games consoles have been slashed as retailers desperately tried to shift mountains of stock. The Sega Megadrive gift set, which was priced at pounds 160 for Christmas 1992 was selling at pounds 129 by the autumn and pounds 99 after mid- November.

Stanley Kalms, Dixons' chairman, told the Independent on Sunday there would be no ongoing problems with computer games. 'We don't have any stocks of any consequence.'

He was optimistic about the pick-up in general consumer demand. 'People are looking at bigger ticket items like big- screen TV. They are also more interested in sophisticated TV with Nicam stereo and surroundsound. Computers also continue to sell in huge amounts.'

Excluding computer games, Dixons' hardware sales were running 8-9 per cent ahead of last year, although margins have come under more pressure. The group needs a new consumer electronics fad to boost sales. But Mr Kalms played down the likelihood of a blockbuster product in the next 12 months. He conceded: 'Our big weakness is the small high- street shops. They are cluttered and crowded - a hard shopping experience.'

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