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Stabilising housing is the foundation for Kingfisher

Its strong presence in France has traditionally been seen as a major positive for Kingfisher, but the current shakiness of the country's economic situation means questions have been raised over how much of an advantage it really is.

About 50 per cent of the B&Q owner's earnings come from across the Channel, so it was always going to be hurt by fears France could be heading for a slowdown. As a result, the performance of the DIY giant's French chains – which include Brico Dépôt – will be of particular interest on Thursday when the company announces its third-quarter figures.

Despite the City's concerns, Liberum Capital's Simon Irwin is fairly positive. He says that although he is "increasingly cautious" about demand from consumers across the eurozone generally, the DIY market in France should avoid taking as large a hit as other areas.

The analyst, who expects like-for-like sales in the country to have risen 1.7 per cent, points out that in France both the number of new homes being built and house prices have managed to stay fairly stable, supporting his opinion that the amount of money spent by consumers on DIY is not "particularly vulnerable".

Back on these shores, Mr Irwin is expecting B&Q's like-for-like sales to have edged back 1 per cent. On the downside, he says the group will have been hit by the recent "adverse weather and deteriorating consumer" sentiment, although he adds that this will have been partially compensated for by a reduction in competition, with its rivals Focus and HomeForm both recently going into administration.

Source : Toby Green – The Independent

28 November 2011
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