Kingfisher IMS: UK & Ireland LFL sales drop by 1%

Kingfisher has published its latest trading update, covering the 26 weeks ended 3rd August 2013.

Kingfisher Group reports half year sales up 4.3%, up 1.5% (-0.8% LFL) in constant currencies, adjusted pre-tax profits down 1.6% to £365 million. Statutory post-tax profit up 69.9% including the £145 million exceptional credit from resolution of French tax case.

Kingfisher UK & Ireland total sales were up 0.2% (-1.0% LFL) to £2,270 million. Across H1, sales benefited from higher sales of outdoor seasonal products (+6%), offset by a slower underlying market impacted by weak consumer confidence. Sales patterns were unusually volatile across H1 driven by record cold weather in Q1 followed by better weather in Q2.

Kingfisher UK & Ireland reported broadly flat retail profit of £141 million (2012/13: reported £143 million including the benefit of a one-off construction related claim for around £5 million). Gross margins were up 30 basis points, benefiting from on-going self-help initiatives offset by investment in pricing. A strong focus on operating cost efficiencies continued across both businesses. Retail operating margins across H1 (Q1: 4.7%; Q2: 7.6%) were driven by the weather affected sales patterns and operational leverage.

B&Q UK & Ireland’s total sales were down 1.8% (-1.7% LFL) to £1,957 million. Sales of outdoor seasonal products were up around 6%, after a difficult H1 last year, impacted by record adverse weather. In line with weather patterns across H1 this year, sales of outdoor seasonal products were down 11% in Q1 and up 17% in Q2. Sales of indoor product were down around 3% across H1.

The market for the UK’s leading home improvement retailers was up around 2% with seasonal ranges up 9%. On a comparable basis, B&Q UK & Ireland’s sales were down around 1%.

TradePoint continues to progress well with sales to TradePoint customers up around 7% compared to H1 last year. Over 1.3 million have now registered as TradePoint customers. In Ireland, following the conclusion of the Examinership process in May 2013, one store has now closed and significant rent reductions have been achieved across the remaining stores. The stores are showing signs of improved trading.

Screwfix grew total sales by 14.6% (+3.6% LFL) to £313 million, in a challenging smaller tradesman market, estimated to be down around 1%. Screwfix benefited from extended opening hours, new ranges (e.g. paint and work wear), the continued roll out of new outlets and the successful introduction of a mobile ‘click, pay & collect’ offer last year. Nineteen outlets were opened during H1, taking the total to 294.

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Ian Cheshire, Group Chief Executive, said:

“After a difficult first quarter, in which sales and profits were affected by record bad
weather, we were able to capitalise on the better weather in the second quarter particularly
in the UK, to grow quarterly profits and so deliver a broadly flat result across the half.
However, underlying consumer confidence remains weak in our major markets, so we continue to focus hard on our self-help initiatives to drive growth, margin and cost efficiencies.

“Looking ahead, we remain ready to capitalise on any improvement in conditions or opportunities as they arise, including the potential pick up in the UK housing market. In the meantime, our self-help plan, ‘Creating the Leader’, continues to progress well, including the acquisition of 15 stores in Romania, our first new country entry in seven years. I am also delighted to have received final resolution of the Kesa demerger French tax case, after nine years. Overall, we remain confident in our future prospects.”

Source : Kingfisher PLC
www.kingfisher.com