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B&Q update may show slump in sales

The plight of the retail sector will remain in the spotlight next week with the release of official sales figures and an update from B&Q firm Kingfisher.

B&Q, which has 330 stores in the UK and Ireland, increased sales by 1.5% to £1.1 billion in the three months to April 30. Yet brokers expect Thursday's second quarter trading update to show sales have fallen by as much 5% on a like-for-like basis since then.

Chief executive Ian Cheshire suggested that the warm weather and early spring may have brought forward some outdoor sales and that he expected the rest of the year to be tough, especially in the UK.

Retail analysts at broker Deutsche Bank also suggest that the impact of Focus DIY's closing down sale pulling customers away could account for as much as 3% of any decline.

While they argue in the longer term the overall reduction in DIY shed space should be good news for B&Q, even if UK housing transactions do not recover, they have cut their 2011/12 profits forecast for B&Q by £18 million. Deutsche Bank estimates Kingfisher's full year profits for the year to January 2012 will reach £780 million, up from £670 million.

Source : Talk Talk Business News

16 July 2011
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