Home improvement giant Kingfisher (KGF) announces a modest-but-most-welcome rise in first quarter sales amid tough retail market conditions.

Reassuringly, the FTSE 100 retailer also leaves full year guidance unchanged, yet the shares are 2.6% easier at 235.6p in early dealings.

The reverse reflects the ongoing challenges facing the French business and disappointment on the absence of any news on the appointment of a new chief executive officer (CEO).

A departure date for the current boss Veronique Laury has still to be decided after the board finally lost patience with the pace of improvement under her ONE Kingfisher turnaround plan back in March.

Yet this may leave many investors feeling that Kingfisher remains strategically rudderless during this prolonged uncertainty.

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The DIY giant reports sales up 1.7% to £2.8bn for the quarter to 30 April with like-for-like sales nudging 0.8% higher. However, this same-store showing is slightly disappointing given the very soft and theoretically easy-to-beat prior year comparator.

B&Q BOOST

Encouragingly, like-for-likes rose 3.4% in the UK & Ireland, driven by 2.8% same-store growth at DIY chain B&Q and a 4.5% like-for-like improvement at plumbers’ and electricians’ favourite Screwfix. Perhaps the knowledge that sales were mainly boosted by a rare spell of decent British weather is also tempering investor excitement.

Numis Securities, with a ‘sell’ rating and 160p price target, explains: ‘The UK was slightly better than we had originally forecast against weather-related comparatives, with B&Q like-for-likes up 2.8% and Screwfix up 4.5%, although following recent reporting from Travis Perkins (TPK), we expect a better outcome was anticipated.’

FELLED BY FRANCE

In terms of the international operations, Kingfisher flags strong like-for-like sales growth in Poland, up 6.2% in fact, as well as in Romania, where like-for-likes were a stunning 24.6% ahead.

But across the channel in France, like-for-like sales slumped 3.7%, reflecting poor performances at both Castorama, where ‘transformation-related activity’ impinged on performance and at Brico Depot, where fewer promotions crimped sales.

Kingfisher is hosting an ‘Innovation Day’ for analysts and investors in London today, where it will demonstrate innovative new home improvement products and services, a new convenience format and chat about the ‘continuous improvement of our best-in-class Screwfix proposition’. That’s all well and good, but the market is evidently disappointed by the lack of fresh leadership and is voting with its feet today.

The new CEO has his or her work cut out. Recently-unveiled results for the year to January revealed a disappointing 13% drop in underlying pre-tax profit to £693m, with profit increases in the UK and Poland more than offset by weakness at Castorama and losses in Russia and Romania.

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Issue Date: 15 May 2019