Kingfisher sales pick up

City A.M. Reporter
Kingfisher, Europe's biggest home improvement retailer, said underlying sales recovered in its second quarter, showing its resilience in the economic downturn even though heavy rain put British and French shoppers off buying seasonal ranges.

The firm, which runs the market-leading B&Q chain in Britain as well as Castorama and Brico Depot in France and elsewhere, said on Thursday sales at stores open over a year fell 0.4 per cent in the 10 weeks to 7 July, the bulk of its fiscal second quarter.

That compares with a first quarter fall of 4.8 per cent.

Like-for-like sales at B&Q UK and Ireland rose 1.6 per cent.

That compares to analysts' consensus forecast of a rise of 0.4 per cent, according to a company poll, and a first quarter slump of 11.7 percent blamed on the wettest April since records began.

However, the firm said B&Q's gross margin is expected to be down, reflecting price cuts to clear horticultural stocks and other promotions.

Underlying sales at Castorama France fell 0.2 per cent after a fall of 0.8 per cent in the previous quarter, while they fell 4.8 per cent at Brico Depot, following a rise of 2.4 per cent.

Analysts had forecast rises of 1.7 per cent and 0.9 per cent respectively.

Many European retailers are suffering as disposable incomes are squeezed by inflation, muted wages growth and government austerity measures, and as shoppers fret over the implications of the euro zone debt crisis.

Kingfisher, the world's No. 3 home improvements retailer behind US groups Lowe's and Home Depot, has generally performed better than most, offsetting weak demand in many of its markets with a drive to improve profitability by buying more goods centrally, and directly, from cheaper manufacturing centres like China.