Kingfisher's 'other international' sales grow by 1.1% (LFL -1.5%)

Kingfisher has reported on Q3 trading, covering the 13 weeks ended 1 November 2014.

Kingfisher reports Q3 sales of £2.8 billion, down 0.9% LFL and retail profit of £225 million, down 6.9% in constant currencies.

Other International total sales grew by 1.1% (-1.5% LFL) to £604 million reflecting slower markets in Poland, Spain and China offset by LFL growth in Russia. Retail profit decreased by 26.3% to £35 million driven by lower profits in Poland and Russia and new country development costs.

During Q3, six net new stores were opened including one in Portugal, one in Turkey and four Screwfix outlets in Germany.

Sales in Poland were down 1.1% (-1.1% LFL) to £283 million reflecting a slower market. Gross margins were down 30 basis points reflecting self-help initiatives helping to offset more promotional activity and strong comparatives (up 110 basis points in Q3 last year). Retail profit declined by 5.6% to £37 million reflecting the weaker sales and lower gross margins, offset by tight cost control.

In Russia sales were up 13.9% (+9.6% LFL) to £119 million benefiting from a strong market. Retail profit was £5 million (2013/14: £9 million reported retail profit) largely reflecting adverse foreign currency exchange movements. In Turkey, Kingfisher’s 50% JV, Koçtaş, grew sales by 17.1% (+8.2% LFL) to £90 million benefiting from new store openings, improvements in customer offer and more promotional activity. Retail profit contribution was up 17.2% to £4 million.

In Spain, sales grew by 11.7% (-7.3% LFL) to £75 million reflecting new store openings offset by a difficult environment. Retail loss was £1 million (2013/14: breakeven result).

Sales in China declined by 10.6% (-10.6% LFL) to £97 million impacted by a slowing Chinese property market* which was down around 12%. Retail loss was £4 million (2013/14: £4 million reported retail loss).

New country development activity
Romania contributed sales of £26 million. The retail loss of £3 million includes costs relating to the previously announced accelerated conversion of stores to the Brico Dépôt format.

Costs relating to newly entered countries, Germany with Screwfix and Portugal with Brico Dépôt, amounted to £3 million.
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Sir Ian Cheshire, Kingfisher Group Chief Executive, said:

“Trading conditions in our largest and most significant market, France, were particularly difficult and deteriorated across the quarter, impacted by the weak economic backdrop. In the UK however, where conditions have been more favourable, we have delivered LFL growth with Screwfix performing particularly well, delivering a 25% increase in sales on top of very strong growth last year. Overall, we remain cautious on the outlook, especially in France, and continue to focus on margin and cost initiatives to support our performance.

“As I prepare to step down as Group Chief Executive on 8 December, I would like to take this opportunity to thank the 79,000 staff at Kingfisher for their hard work and support over the past seven years. I am proud of what we have achieved together and I am delighted that Véronique Laury will be succeeding me. Her passion for product, for customers and for home improvement together with her 26 years’ experience in the sector, make her the right choice for the role and I wish her every success in the future.”

Véronique Laury, Kingfisher Group Chief Executive designate, said:

“I am delighted to be succeeding Sir Ian. He leaves a strong, and more sustainable business with a clear sense of purpose. I believe Kingfisher has an important role to play in improving people’s lives by helping them to improve their homes. With more than 26 years in home improvement, and 11 years at Kingfisher, I know our employees and our businesses well and I understand the reality of our customers’ lives. I look forward to putting my experience to work to build on Sir Ian’s legacy with passion, energy and pace.

“I am also very pleased to have announced Marc Ténart as my successor as Chief Executive of Castorama France. Marc has been in the Group for 14 years, holding senior roles at Castorama France and previously Chief Executive of our Brico Dépôt business in Spain, so I am confident he will do a great job.”

Source : Kingfisher
http://www.kingfisher.com/