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UK DIY News

Kingfisher falls as B&Q worries build up

Kingfisher closed at its lowest price since December last night thanks to fears over the challenges facing its flagship B&Q chain.

The home improvement group slid back over 4 per cent as Société Générale downgraded its rating to "sell", with the broker saying that "more severe consumer headwinds" means it is "time to worry about B&Q in the UK".

Pointing out that "total sales, and more importantly, sales density, have been in decline since 2005", SocGen's analyst John Baillie predicted that the DIY chain's retail profits will fall nearly 15 per cent over the next two years.

Giving one of the reasons for his pessimism as the link between B&Q and the property market, he added that the "current trends and outlook for the housing market in 2011 and 2012 are not good; falling activity and falling prices make an unpleasant cocktail for the home improvement sector and for the UK market leader, B&Q, inparticular".

On the group generally, he said, "more challenging times lie ahead in terms of delivering growth post the recovery phase, as this will be based on international expansion". He added that many countries "are not ready for the group's retail home improvement model".

As a result Kingfisher slipped back 11.4p to 243p, but it was by no means the only retailer struggling. Marks & Spencer and Next dropped 6.6p to 339.8p and 36p to 1,940p respectively.

Source : Toby Green - The Independent

02 March 2011
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