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Kingfisher wet-weather "excuse" unlikely to yield investor sympathy

24th May 2023 12:53

(Alliance News) - Kingfisher PLC on Wednesday said wet weather tempered first-quarter sales, though decent sales of larger items may provide its investors with some "solace".

The DIY retailer said sales for the first-quarter ended April 30 rose 0.8% year-on-year to GBP3.27 billion. On a like-for-like basis, measured in constant currency, sales fell 3.3%, however.

"The unusually poor spring weather in the UK and France affected our seasonal sales in the quarter, impacting demand for items such as garden and outdoor products," Chief Executive Officer Thierry Garnier said.

Kingfisher owns retail brands such as B&Q and Screwfix in the UK and Castorama and Brico Depot in France. The latter also operates in Spain and Portugal.

Kingfisher said sales in seasonal categories, including items such as garden fixtures, fell 11% like-for-like during the first-quarter. Seasonal items made up 18% of Kingfisher's sales.

The largest contribution came from big-ticket items, which made up 82% of sales. Like-for-like sales in that category fell 1.3%.

AJ Bell analyst Russ Mould commented: "Investors hate excuses as much as a teacher being told 'the dog ate my homework' and B&Q owner Kingfisher's apportioning a drop in sales to 'unusually poor spring weather' in its core markets in the UK and France won't draw much sympathy.

"Yes, when it is wet people are less likely to be out in the garden but, in the UK in particular, spring weather is often unsettled. Investors will take some solace from the strong sales of 'big-ticket' items, which implies there isn't undue pressure on consumer spending."

Kingfisher reported "improved trading since early April", helped by more resilience in big-ticket sales, as well as a better showing in seasonal products.

"As we move through our key trading season, we are pleased to see that sales in our core and 'big-ticket' categories, which make up over 80% of our total sales, are showing continued resilience," Garnier said.

The company left annual guidance unchanged. It is "comfortable" with sell-side analyst expectations of adjusted pretax profit of GBP634 million. It would represent a 16% fall from GBP758 million the year prior.

Kingfisher was a pandemic winner, as stay-at-home measures meant consumers had more time for DIY projects. But as mobility curbs have ended, consumers are now prioritising spending in the travel and leisure spaces.

interactive investor Victoria Scholar added: "On top of that, the macroeconomic pressures from rising costs, squeezed household budgets, and falling real wages have added to the consumer strain resulting in less spending in Kingfisher's stores like Screwfix and Castorama in the UK and France respectively."

Kingfisher shares traded 2.0% lower at 241.80 pence each in London on Wednesday afternoon.

By Eric Cunha, Alliance News news editor

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