Dire weather kept the nation’s dwindling band of DIY enthusiasts at home in the first quarter to 30 April, says home improvement giant Kingfisher (KGF), causing group like-for-like sales to slump 4%.

After falling early on, shares in the B&Q-to-Castorama chain owner trade 1.8p higher at 297.2p as investors pin their hopes on progress with the company’s ONE Kingfisher transformation plan.

BEAST FROM THE EAST BITES

Blaming ‘unusually adverse weather conditions which impacted footfall’ and snow-related store closures caused by the arrival of the ‘Beast from the East’ in March, Kingfisher reports a 5.4% decline in UK & Ireland like-for-like sales.

This reflects a weaker performance at B&Q, where sales for stores open for more than a year reversed by an alarming 9%. Besides the weather hit, less shoppers filed through the doors at B&Q and demand remains ‘soft’, trends which should worry shareholders in the over-spaced Kingfisher.

Penrith Screwfix

However Screwfix rode to the rescue once again for Kingfisher, total sales skipping 9% higher with like-for-like sales up 3.6% despite the impact of wintry weather conditions.

Over in Kingfisher’s declining French home improvement market - Banque de France data reveals a 2% drop in Q1 - Castorama’s like-for-like sales softened 8% amid poor weather and price cuts designed to drum up business, although the Brico Depôt arm eked out 0.8% same-store growth thanks to new unified ranges and lower outdoor product exposure.

‘It was a challenging start to the year with exceptionally harsh weather across Europe and weak UK consumer demand,’ says CEO Veronique Laury. ‘This impacted footfall, especially sales of weather related categories. February and March were particularly affected with sales improving over the course of April and into May.’

TANGIBLE PROGRESS

Yet she insists ‘we are on track to deliver our ONE Kingfisher strategic milestones for the third year in a row and we continue to see tangible delivery of our plan,’ and points out her charge has returned a further £40m to shareholders year to date via share buybacks.

‘Around 40% of our ranges are now unified and continue to be well received by customers. Sales of these ranges, excluding outdoor products, are up, and we expect to grow the full year group gross margin, after clearance costs. Meanwhile, we are into the final year of our unified IT platform roll out with Poland now underway and Brico Depôt France due to start soon.'

Kingfisher is facing into an uncertain economic outlook and a cooling property market, although the company will welcome the news that UK retail sales beat expectations in April, with a stronger-than-expected rebound from March’s cold snap.

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SOGGY OUTLOOK

Nevertheless, there is a downbeat outlook statement from Laury, who concedes ‘market conditions continue to be mixed. The UK is uncertain, as demonstrated by recent weak retail sales data; France is encouraging, but volatile; whilst Poland continues to be supportive. We remain confident about delivering the business and customer benefits of our transformation plan, supported by the continued hard work and expertise of our colleagues.'

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Issue Date: 24 May 2018