Kingfisher in growth drive

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Kingfisher, Europe’s biggest home improvements retailer, said new stores and a drive to improve profit margins will help it to cope with a tough economic backdrop, as it beat forecasts with a 20 per cent rise in annual profit.

The group said it would open 67 stores this financial year and test new formats aimed at making “do it yourself” easier for customers. It will also step up a drive to improve profit margins by buying more products centrally, and directly, from cheap manufacturing countries like China.

This drive helped to boost profit before tax and one-off items to £807m in the year ended January 28, topping analysts’ average forecast of £799m.

Sales rose 3.6 per cent to £10.8bn, while the full-year dividend rose 25 per cent to 8.84 pence a share.

“Whilst the immediate economic outlook remains uncertain, we face the future in robust shape and with our successful self-help approach now embedded in the way we do business,” said Kingfisher, which runs the market-leading B&Q chain in Britain as well as Castorama and Brico Depot in France and elsewhere.

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

Kingfisher, with about 950 stores in eight countries, announced a management incentive scheme a year ago which aims to lift adjusted earnings per share to 31.2p in 2013/14 from 20.5p in 2010/11. Earning were 25.1p a share in 2011/12.

The group’s shares, up 23 per cent over the last three months, closed on Wednesday at 300p, valuing the business at about £7.2bn.