- Q1 like for like sales hit by poor weather
- Company reiterates full year guidance
- Trading improved since early April
Home improvement retailer Kingfisher (KGF) said first quarter like-for-like sales fell 3.3% as poor spring weather impacted demand for seasonal products.
The shares fell 1.6% to 242.9p, leaving them flat on the year and down around 16% since early February.
Sales for the three months to 30 April increased 0.8% to £3.27 billion. In constant currencies sales were 2% lower and fell 3.3% on a like-for-like basis.
Seasonal categories, which represent nearly a fifth of sales, were affected by poor weather during March, which resulted in an 11.3% fall in like-for-like sales.
Meanwhile, core ‘big ticket’ categories which represent the bulk of sales fell 1.3% on a like-for-like basis.
Kingfisher said trading had improved since early April with continued resilience in core and better seasonal sales.
Screwfix was the standout performer in the UK and Ireland with sales up 6.6% to £610 million reflecting ‘strong’ market share gains. Kingfisher is targeting 85 new store openings across the UK, Ireland, and France in the current financial year.
For the three weeks to 20 May, the company said like-for-like sales were down 1% including a 0.4% impact from the UK coronation public holiday, demonstrating an improvement in trading.
WHAT DID THE COMPANY SAY?
CEO Thierry Garnier commented: ‘E-commerce sales were another highlight in the quarter, up 4.7%. One of the drivers of this is the continued success of B&Q's marketplace, which reached 27% of B&Q's online sales in April, a year after its launch.
‘Across the group, we are maintaining a sharp focus on competitive pricing, while balancing inflationary pressures. With the continued easing of raw material prices and freight costs, we expect to see lower product cost inflation in H2.’
‘We are comfortable with market expectations for the business this year, and confident in delivering growth ahead of our markets, strong cash generation, and higher returns to shareholders over the medium-term.’
Company-compiled data shows analysts are calling for adjusted pre-tax profit of £634 million. For the first half the company expects to report an adjusted pre-tax profit of around £350 million.
EXPERT VIEW
Russ Mould, investment director at AJ Bell, said: ‘Investors hate excuses as much as a teacher being told ‘the dog ate my homework’ and B&Q owner Kingfisher’s apportioning a drop in sales to ‘unusually poor spring weather’ in its core markets in the UK and France won’t draw much sympathy.
‘Yes, when it is wet people are less likely to be out in the garden but, in the UK in particular, spring weather is often unsettled. Investors will take some solace from the strong sales of ‘big-ticket’ items, which implies there isn’t undue pressure on consumer spending.
‘Significantly, Kingfisher is seeing its own cost inflation pressures ease. It will be interesting to see to what extent it passes this on to shoppers. For management it is a tricky balancing act between maximising profitability and protecting its market share and continuing to get people through the tills.’
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (James Crux) own shares in AJ Bell.
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