French setback sees DIY group Kingfisher miss sales targets
Sales were 6.2% ahead of weak year-ago numbers in Britian and Ireland
Home improvement retailer Kingfisher missed forecasts for sales growth in its latest quarter, held back by the weak performance of its French businesses.
Shares in the group were down 2.8 per cent in mid-afternoon trading on Wednesday, extending year-on-year losses to 19 per cent, after it said like-for-like sales rose 0.8 per cent in the three months to April 30th, its fiscal first quarter. That was - below analysts’ consensus forecast for growth of about 1.6 per cent.
Kingfisher, whose main businesses are B&Q and Screwfix in Britain and Ireland, and Castorama and Brico Depot in France and elsewhere, is in the fourth year of a five-year programme that was designed to boost earnings. However, profits went backwards in its 2018-19 year and the group said in March it would part company with Véronique Laury, its chief executive since 2014.
Despite Ms Laury’s planned departure, the group is sticking to her strategy. Costing £800 million over five years, it involves unifying product ranges across brands, boosting e-commerce and seeking efficiency savings.
The group was up against weak comparative numbers in its first quarter. In the same period last year group like-for-like sales fell 4 per cent as adverse weather dented demand. This year, first quarter like-for-like sales rose 3.4 per cent – 6.2 per cent in Britian and Ireland and 24.6 per cent in Poland and Romania respectively but were down 3.7 per cent in France.
“We think France sales have been affected by continued range disruption and as the digital offer is taking time to ramp up,” said RBC Europe analyst Richard Chamberlain, who has an “underperform” rating on the stock. “We still see a high risk of a potential margin rebase by a new CEO, particularly in France,” he said. Total group sales were £2.8 billion in the quarter, up 1.7 per cent.
Kingfisher said its expectations for the full year were unchanged.
Prior to Wednesday’s update, analysts’ average forecast for 2019-20 underlying pretax profit was £671 million, down from £693 million made in 2018-19. – Reuters