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B&Q suffers as customers flock to Focus clearance

B&Q sales have taken a hit from poor summer weather and popular closing down sales at rival Focus DIY in the past few months. Owner Kingfisher reported a 6.7 per cent slide in the DIY retailer's like-for-like sales in the 11 weeks to July 16.

This includes a 20 per cent plunge in sales of seasonal outdoor goods, as rainy weather in the wake of an unseasonally warm spring and stock clearance at collapsed rival Focus DIY took their toll.

Sales of indoor goods were 'broadly flat' due to promotions and other sales initiatives. And sales at Screwfix, the UK business aimed at building trade professionals, were up 10.5 per cent.

Kingfisher's group like-for-like sales were 0.5 per cent lower in the quarter as the difficulties in the UK were offset by a strong performance in France.

Chief executive Ian Cheshire admitted these were 'testing times for retailers, particularly in the UK'. But growth in France meant the company was still on track, and gross profit margins were ahead in all major markets in the current quarter.

'As anticipated, conditions in our second quarter were tougher than the first quarter which benefited from favourable weather,' he said. 'The UK market remains challenging compounded by disruption in the second quarter from heavy stock clearance activity by a major competitor closing down.'

The closure of Focus DIY meant the company had been able to secure 'excellent new sites' for B&Q,' he added.
Shares in Kingfisher were 4.75p higher at 257.95p in trading today.

Investment bank Espirito Santo said the news from Kingfisher was 'mixed', with the UK and international arms weak but France better than expected and gross margins up in all major markets.
But it kept a buy recommendation on the stock, saying: 'Clearly there is some short-term weakness evident in this statement, but the Focus administration is now out of the way and management continues to deliver consistently on the longer term strategy of improving gross margin through direct sourcing and common buying.'

Broker Oriel Securities said: 'Despite the company’s efforts to get expectations for the second quarter down in recent weeks, this is a disappointing statement from Kingfisher in which the UK remains a significant issue with B&Q like-for-like sales declining by 6.7 per cent.

'Without doubt the actions of Focus management as the chain approached administration will have disrupted the market and may explain as much as 4 per cent of the drop. That said an underlying decline of 3 per cent is still a worry.'

Source : Tanya Jefferies - This is

21 July 2011
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