Kingfisher profits in France set to worsen
KINGFISHER, EUROPE’S biggest DIY retailer, said trading conditions were likely to worsen in France, its most profitable market, as it reported first-half group profit missed forecasts, hit by poor weather and a strong pound.
Kingfisher, which runs the market-leading BQ chain in Britain and Castorama and Brico Depot in France and elsewhere, said it was now more worried about its business in France than in Britain, a reversal of its thinking in the past three years.
“While the [French] market has been positive in the first six months, the uncertainty is really a product of political uncertainty,” chief executive Ian Cheshire said yesterday, pointing to anxiety over president François Hollande’s tax policies and people’s attitude to the euro zone debt crisis.
Mr Cheshire said the British market was “bumping along”, not growing and not seeing significant decline. Sales of higher-ticket items were holding up relatively solidly, he said, adding he detected “a slight sense of a post-Olympic feelgood factor which, I think, if we get some more decent weather this month might set a new trend”.
He said he would welcome government initiatives to stimulate the UK economy, particularly those focused on job creation and improving infrastructure.
Kingfisher undershot forecasts with a 15.5 per cent fall in first-half profit that reflected a hit to sales from dreadful summer weather in Britain and France and government austerity measures across Europe.
Falls in the value of the euro and the zloty – Poland is Kingfisher’s biggest market in eastern Europe – also hit profit when converted into sterling.
Pretax profit before one-off items fell to £371 million in the six months to July 28th, compared with a forecast for £395 million in a poll conducted by the company.
Kingfisher estimated the record wet weather in northern Europe cost it over £30 million profit as customer footfall fell and it had to cut prices to clear seasonal stock.
It said adverse foreign exchange movements cost it £25 million, while £10 million was spent accelerating the roll out of new common own brands in Britain.
Total sales fell 3.3 per cent to £5.48 billion, with sales at stores open over a year down 2.8 per cent. – (Reuters)