Kingfisher stays cautious after barbecue boost

Kingfisher Plc (KGF.L), Europe's biggest home improvements retailer, said a surge in sales of garden furniture and barbecues during warm spring weather had not changed its cautious outlook on consumer spending.

The group, which runs market leader B&Q in Britain as well as Castorama and Brico Depot in France, said on Thursday shoppers in Britain in particular remained under pressure from higher prices and austerity measures, and the recent flurry in spending was probably just brought forward from the summer.

"Whilst we have got off to a good start, it remains our view that this year is likely to be a tough one for all retailers, especially in the UK," Chief Executive Ian Cheshire said.

Kingfisher shares, which hit a six-year high on Tuesday, were down 3.5 percent at 272.3 pence by 4 a.m. EDT, the biggest fall among European blue-chip stocks.

Kingfisher, with 860 stores in eight countries in Europe and Asia, said retail profit jumped 19 percent to 174 million pounds ($284 million) in the 13 weeks to April 30, close to an average forecast of 178 million in a Reuters poll of eight analysts.

"This was a very good start to the year," said Investec analyst David Jeary. "(But) the company's cautious comments ... means full-year forecasts are unlikely to change.

"With the shares needing upgrades to push on from here, we think there could well be some profit taking."

Cheshire told reporters that trading in Britain, where the government is making particularly swingeing spending cuts, was noticeably harder than in countries like France and Germany.

"We definitely see a more confident customer in other markets in Europe," he said on a conference call. "The pattern seems to be pretty entrenched."

He said collapse of smaller rival Focus DIY would probably disrupt trading in Britain until the end of the July while its stock was sold, but would be a small help thereafter. Kingfisher bought 31 Focus stores from its administrator.

HOSEPIPES AND GNOMES

Kingfisher, world number three behind U.S. groups Home Depot (HD.N) and Lowe's (LOW.N), said sales at stores open more than a year climbed 3.3 percent, led by a 5.4 percent rise in France.

Profits benefited from its drive to buy more goods centrally and directly from cheaper manufacturing centers like Asia.

Like-for-like sales at B&Q were up 1.5 percent, the best performance for seven quarters. But the gross margin was down slightly, because sales were skewed to less profitable lines.

Sales of seasonal ranges like outdoor furniture and barbecues jumped 15 percent at B&Q and 14 percent at Castorama.

However, sales of indoor projects like kitchens and bathrooms were down 10 percent in Britain, suggesting shoppers there were still sticking to a tight budget.

B&Q sold 2,500 miles of hosepipe as Britain enjoyed the warmest April on record. Patriotic shoppers also snapped up over 10,000 royal wedding gnomes, although curiously they bought around 500 more bridegrooms than brides.

Like-for-like sales in Poland climbed 4.5 percent, flattered by a big fall in the same period last year, while losses at Kingfisher's Chinese business fell in line with expectations.

Source : Mark Potter – Reuters
www.reuters.com/article/2011/06/02/us-kingfisher-idUSTRE7511RT20110602