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Poor weather clips Kingfisher's wings

Kingfisher was among the fallers on Tuesday as retailers lagged behind a London market rally.

Shares in the DIY specialist slipped 0.3 per cent to 289.6p, their lowest since mid-March, on fears that a month of bad weather in the UK had damaged sales.

“The shares may weaken further as the market realises just how bad the first quarter could be,” said Deutsche Bank, Kingfisher’s house broker. It forecast same-store sales for its B&Q chain to have slumped 10 per cent.

“Last year the weather was superb in April, Easter was late and there was an extra day’s holiday due to the Royal Wedding. This year by contrast Easter was earlier at the beginning of April, it was wet and cold, and it has stayed that way ever since.”

A 10 per cent drop in sales would cut Kingfisher’s quarterly earnings by £32m, Deutsche said. However, it anticipated that management would have cut staff costs and advertising to protect profit margins and keep the damage close to £10m, resulting in first-quarter group profit of £170m. It advised investors to look past the short-term weather impact and use any weakness as a buying opportunity.

Source: Bryce Elder - FT.com
http://www.ft.com/cms/s/0/06555b86-9360-11e1-8ca8-00144feab49a.html#axzz1teIeJPTR

01 May 2012
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