Kingfisher misses targets despite B&Q boost

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A weather-inspired sales boost at B&Q failed to prevent owner Kingfisher from missing quarterly profit expectations as promotions and product mix hit UK margins while performance in its French arm was subdued.

The firm said like-for-like B&Q sales in the UK and Ireland rose 9.7 per cent in the 13 weeks to May 3, compared to a year before. Sales of outdoor seasonal goods and building products were almost a third higher than a year ago, aided by better weather and a later Easter.

In France, one of the group’s main markets, like-for-like sales grew by just 1.6 per cent at its Castorama and Brico Depot DIY chains. Kingfisher said it was hit by “ongoing weak consumer confidence” in France.

Overall, the group’s retail profit rose 20.3 per cent to £142m for the period but this was below the market consensus of £145m. Shares slid nearly 6 per cent.

Kingfisher chief executive Sir Ian Cheshire said: “We have made a strong start to the year, capitalising on more favourable weather conditions right across Europe to achieve sales and profit growth in France, the UK & Poland, our three largest markets.

“Whilst this is encouraging, the first quarter is one of our smallest and the growth achieved largely reflects comparisons with the very difficult start to last year.”

The first quarter of 2013 had seen the UK and Europe hit by extended periods of rain and snow.

Kingfisher said margins were down 2 per cent in the UK, partly due to higher sales of less profitable seasonal goods and promotions on kitchens and bathrooms.

Screwfix saw its like-for-like sales grow 12 per cent as it opened nine stores in the period, and shoppers responded to a promotional programme.

Across the rest of Kingfisher’s foreign markets the picture was mixed, with the group reporting losses in Russia, Romania and China. However, in Poland, the group saw like-for-like sales lift 11.9 per cent.

Hargreaves Lansdown head of equities Richard Hunter said there was “a restrained economic backdrop in France, whilst gross margins suffered in the UK given the rise in demand for cheaper products and a number of sales in the period.”

Kingfisher added it was still in exclusive talks to buy French rival Mr Bricolage for £227m.