B&Q nails opposition with growth in sales

DIY chain B&Q will turn the screw on a depleted number of rivals this week as it delivers stronger sales and hammers out plans for further overseas growth.

The Kingfisher-owned business benefited from the warmest April on record and a string of bank holiday weekends, boosting sales of seasonal items such as barbecues, garden furniture and outdoor toys.

Like-for-like sales in the three months to the end of April are likely to have grown by 1.5 per cent - a robust performance given the backdrop of weakening consumer confidence.

But demand for big-ticket items - such as kitchens, bathrooms and garden sheds - is expected to have seen limited growth as shoppers tighten their purse strings in the face of rising inflation and sluggish wage growth.

Analysts at Bank of America (BoA) Merrill Lynch are also expecting Kingfisher to report a 3 per cent rise in overall group sales to 2.73 billion. Takings will have been bolstered by solid overseas sales in countries such as France and Poland.

Kingfisher has pledged to accelerate its growth following a 22.5 per cent rise in pre-tax profits to 670 million in the year to 29 January.

The company has 492 stores in the UK and Ireland - 330 B&Q and 162 under its Screwfix brand - plus 203 in France trading as Castorama and Brico Depot.

A further 161 outlets are located in Poland, China, Spain, Russia and Turkey but Kingfisher will look to double this figure over the long term.

The group recently bought 31 stores in the UK from collapsed DIY rival Focus, whose remaining outlets are staging a closing-down sale over the bank holiday weekend. Analysts say that could have some impact on B&Q during a key trading period for the sector.

City sentiment on Kingfisher remains largely positive, however. Aurelie Caspar, a research analyst at BoA Merrill Lynch, said the company had the scope to "outperform the sector".

Some 3,000 jobs were left at risk last week when administrators for Focus failed to find a buyer for the company. Ernst & Young did manage to strike deals to sell 55 of the 178 stores, including four in Scotland, to Kingfisher, B&M Homestores and builder's merchant Wickes. Joint administrator Simon Allport warned that the DIY sector had become "highly competitive, with only the strongest players being able to thrive and survive".

Last month, B&Q arch rival Homebase reported flat annual sales of just over 1.5bn but said it had improved its operating profit and margins.

The chain, which is owned by Argos parent Home Retail Group, added that it would "continue to examine the opportunity for new store openings" alongside a "small number of closures, relocations or downsizes".

Earlier this month, official retail figures revealed a better-than-expected performance in April as a combination of the royal wedding and hot weather lifted sales.

Source : Scotsman.com
www.scotsman.com/business/b_amp_q_nails_opposition_with_growth_in_sales_1_1655911