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Spring weather boosts Kingfisher DIY sales, but it warns of uncertain outlook

As the market heads lower again on worries about the global economic recovery and a Greek default, one of the biggest fallers is Kingfisher.

The B&Q owner has dropped 9.4p to 272.7p as the company's first quarter figures - while good - failed to beat expectations and it gave a cautious outlook statement. Like for like sales in the three months to the end of April rose 3.3% across the group and profits climbed 19.1% to £174m, helped by favourable weather, a late Easter and the number of bank holidays - a traditionally strong period for DIY businesses.

But this has a possible downside, if consumers have just brought forward purchases of barbeque gardening equipment which they would have made anyway. Chief executive Ian Cheshire said despite the good start to the year, Kingfisher believed it would be a tough year for retailers, especially in the UK:

“It is also likely the spring weather will have brought forward some of our outdoor seasonal sales. So we remain very focused on our well established programme of self-help to deliver a solid full year result, especially with our key summer trading period in France still ahead of us.”

Indeed France was the star performer in the quarter, with like for like sales up 5.4%, compared to a 1.4% increase in the UK and a 3.6% rise elsewhere. Nick Bubb at Arden said:

Today's first quarter from Kingfisher was expected to be strong, and retail profit growth of 19% to £174m is certainly good. But it is below our £180m forecast and is not as good as the bulls had hoped and is not good enough to deliver full-year profit upgrades at this stage. The big business in France has done very well, with stellar 30% profits growth, and the UK profits growth of 15% is solid, but there have been mixed results elsewhere overseas, buried in the surprisingly weak £14m "other international" line.

Hopefully next week's annual analysts trip to sunny Kracow in Poland can re-enthuse investors.

Source : The Guardian

02 June 2011
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