Kingfisher concerns grow over France

DIY retailer Kingfisher 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 B&Q 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 Francois Hollande’s tax policies and people’s attitude to the eurozone debt crisis.

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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”.

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.

Pre-tax profit before one-off items fell to £371m in the six months to July 28, compared with a forecast for £395m in a poll conducted by the company.

Kingfisher estimated the record wet weather in northern Europe cost it more than £30m profit as customer footfall fell and it had to cut prices to clear seasonal stock.

It said adverse foreign exchange movements cost it £25m, while £10m was spent accelerating the roll out of new common own brands in Britain. Total sales fell 3.3 per cent to £5.48bn.