Kingfisher Slips on Poor B&Q Sales
Feb 21st 2013 9:45AM
Updated Feb 21st 2013 10:20AM
LONDON -- Kingfisher this morning released a trading update for the fourth quarter, which saw the company suffer after a tough period.
Although total sales for the 14 weeks to 2 February 2013 against the 13-week period last year were up 1.5%, on a like-for-like (LFL) basis, total group sales dropped 3.4%, and were down 1% in constant currencies.
The owner of the B&Q and Screwfix brands saw sales at home in the U.K. suffer in particular, with a LFL decline of 5.8% overall. Operations in France didn't fare much better, either, showing a 2.4% drop in LFL sales, although "Other International" -- including Poland, Spain, Russia and China -- did at least see a 0.3% increase in sales against the comparative period the previous year.
Back to the United Kingdom, B&Q reported total sales of 842 million pounds, down 6.4% on both LFL and the comparable 13-week basis at constant currency. Management put this down to "the generally weak consumer backdrop in the U.K. and a particularly challenging environment in Ireland where our nine stores are now subject to an Examinership process."
Screwfix performed better, though, with total sales for the 14 weeks coming in at 155 million pounds, a 10.3% increase on the comparable 13-week basis. Kingfisher credited this to the company "benefiting from the continued roll out of new outlets and the success of 'click, pay & collect.'"
Group chief executive Ian Cheshire commented:
We have had a tough fourth quarter, ending what has been a tough year affected by unfavourable foreign exchange, particularly poor weather in the U.K. and weaker consumer confidence in our major markets. Thanks to the hard work of our teams and our established programme of self-help initiatives, we end the year in good shape with a strong balance sheet and higher market share. We also made good progress with our new 'Creating the Leader' programme which aims to help our customers have better and more sustainable homes.
Looking ahead we will continue to actively manage the business in these challenging markets with particular focus on improving our customer offer, optimising our cash generation and delivering shareholder value.
Shares in Kingfisher fell marginally on the news, down 0.4% to 277 pence. The company is something of a "slow burner," showing steady if not spectacular growth across the last five years, but enthusiasm surrounding the shares has dampened in the last 12 months, sending them down from a five-year high of 314 pence early last year to their current price today. Whether that's a buying opportunity is, of course, up to you, but remember to do plenty of research into the company before taking the plunge.
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