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Indian summer boosts sales at Kingfisher

Britain's Indian summer helped Kingfisher, Europe's biggest DIY group, beat expectations with a 14pc increase in retail profits in the third quarter.

Retail profits in the 13 weeks to the end of October rose 13.9pc to £273m, a rise of 13.9pc. Analysts polled by Reuters had forecast retail profits of £263m.

The company pointed to the Indian summer, which saw as many barbecues sold in the last week of September as the whole month of June and a 68pc increase in garden furniture sales.

Sales at Screwfix, the builders' merchant, grew 7pc to £136m. The chain opened four new shops in the quarter, taking the total to 179, with another 35 planned for the fourth quarter.
Kingfisher was the biggest riser on the FTSE 100 this morning, with shares up 3.3pc to 264p.

More than 2,000 Kingfisher employees will share a payout of £13.8m as two ShareSave schemes reach maturity. The estimated total gain is £7.4m, with an average gain of £3,516 per employee.

Nevertheless, the strain of depressed wages and austerity measures on families' spending on DIY projects was clear.
Total sales growth of 4.6pc in the quarter to £2.8bn showed a marked slowdown from the heady 18pc growth in the first half. On a like-for-like basis growth was just 1.3pc.

Kingfisher makes 40pc of its sales in Britain and France, running the Castorama and Brico Dépôt chains on the continent.
Like-for-like sales in Britain were down 0.9pc, an improvement from the 1.8pc decline in the first half.

Ian Cheshire, the group chief executive, said the short-term outlook is "challenging" but added: "Kingfisher is in good shape, and we are more able to drive market share gains, profit growth and higher cash return."

Like-for-like sales in other countries grew 3.8pc to £559m. They were up 43.8pc in Russia to £93m on the back of new store openings, with 22.3pc like-for-like growth. But they dipped 5pc to £92m at B&Q China as the housing market slumps.

"The demise of competitors such as Focus and the unusually mild weather have both played into the company’s hands, whilst a continuing focus on costs has eased some of the squeeze on profit margins," said Richard Hunter, head of equities at Hargreaves Lansdown.

"In the near term future Kingfisher remains cautious on prospects, while sales have marginally dropped when compared to the same period a year ago. Even so, despite the challenges which the current economic environment provides, it would appear that the company can be trusted to continue to do the right things."

Source: Matthew Holehouse - The Telegraph

01 December 2011
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