Warm weather boosts Kingfisher

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Mild weather, market share gains and a drive to boost profit margins helped Kingfisher, Europe’s biggest home improvements retailer, beat third-quarter earnings forecasts despite a tough economic backdrop.

The group, which runs B&Q in Britain as well as Castorama and Brico Depot in France, said the short-term outlook for consumers remains challenging. But it is confident of coping, helped by a drive to improve profitability by buying more goods centrally, and directly, from cheaper manufacturing centres like China.

Many retailers are struggling as disposable incomes are squeezed by rising prices, muted wages growth and austerity measures, and amid fears a euro zone debt crisis could plunge the whole European region back into recession.

Kingfisher, which makes about 40 per cent of its sales in both Britain and France, said retail profit rose 14 per cent to £273m in the 13 weeks to October 29.

That compared with a forecast for £263m and marked a slowdown from 18 per cent growth in the first half.

Like-for-like sales in Britain fell 0.9 per cent, improving on a 1.8 per cent decline in a first half disrupted by the closure of rival Focus DIY.

Like-for-like sales rose 1.9 per cent in France, broadly in line with expectations and down from 4.6 per cent in the first half.

Mild weather drove a strong rise in sales of outdoor products, with lawnmower sales up 17 per cent.

Garden furniture sales leapt 68 per cent as consumers took advantage of autumn sunshine to make up for a wet summer.

Shares in Kingfisher, which runs around 900 stores in eight countries, have outperformed the STOXX Europe 600 retail index by six per cent this year.