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Kingfisher reports 1.8% LFL rise in half year sales

Kingfisher has reported half year total sales up 0.9% (+1.8% LFL) and flat adjusted pre-tax
profits of £364 million after the negative impact of foreign exchange translation.

Kingfisher also announces Group Chief Executive succession plan. Sir Ian Cheshire to be succeeded by Ms Véronique Laury, Chief Executive of Castorama France, before the end of the current financial year.

Kingfisher’s Group Chief Executive, Sir Ian Cheshire, said:

“This was a difficult first half with demand in our largest and most significant market, France, remaining particularly weak with a sharp market downturn experienced in our second quarter. We did though deliver flat profits in France, a resilient performance despite the difficult backdrop. However, conditions in the UK were more favourable with better weather and encouraging signs in the smaller tradesman market. We were able to capitalise on the better conditions with Screwfix performing particularly well growing sales by 23%. B&Q UK & Ireland also delivered their best H1 sales growth in over a decade as the new team start to gain traction with its re-energising initiatives and started to make progress with its plan to better position the business for the future.

“Looking to the longer term, we continue to work on our ‘Creating the Leader’ programme including opening Screwfix and Brico Dépôt stores in two new countries and accelerating the rebranding of the recently acquired Romanian business into the Brico Dépôt format.

We remain convinced that investment today to develop the highly profitable Screwfix and Brico Dépôt formats into new markets creates a huge growth opportunity for Kingfisher.

“Whilst our French business saw an improvement in August we remain cautious about the economic backdrop and focused on trading effectively with continued self-help initiatives whilst continuing with our initiatives to build a long term, sustainable future for the business. We have a strong balance sheet and cashflow to enable the necessary investment in the future as well as paying a healthy dividend to our shareholders. I am pleased that we are also recommencing our share buyback.”

Kingfisher UK & Ireland:

Total sales increased by 6.6% to £2,419 million (+4.4% LFL, +3.3% 2 year LFL) and retail
profit grew by 17.7% to £166 million. Gross margins were down 80 basis points largely
reflecting the recognition in Q1 of more promotionally-led showroom sales (kitchens,
bathrooms and bedrooms) from Q4 last year (Q1 gross margin down 210 basis points; Q2
gross margin up 40 basis points). Tight cost control continued, despite higher levels of
variable pay.

On a value basis, the UK home improvement leader market* for H1 was up 5.5% reflecting
better weather year on year, a stronger UK economy and more buoyant housing
construction. On the same definition, Kingfisher UK sales were up around 5%.

During H1, B&Q reduced prices on c.3,500 products helping improve price perception and
increase sales volumes. Over time, as the initiative gains momentum, the resulting growth
in sales volume will also drive growth in sales on a value basis, however so far it is too
early for the results to be seen in Kingfisher UK’s sales performance on a value basis.
Consequently, on a volume basis (being quantity of products sold), the UK home
improvement leader market for H1 was up 3.2%. On the same definition, Kingfisher UK
sales were up over twice that rate with both businesses ahead of the market.

B&Q UK & Ireland:

B&Q UK & Ireland’s total sales grew by 4.0% (+3.2% LFL, +1.5% 2 year LFL) to £2,033
million. Sales of outdoor seasonal and building products were up around 6% benefiting
from the better weather and a more buoyant smaller tradesman market. Sales of indoor
products, excluding showroom, were up around 3%. Sales of showroom products were
down 1.5% reflecting less promotional activity in Q2.

Source : Kingfisher

10 September 2014

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