Analysts were pleased by upbeat updates from DIY retailers Kingfisher and Wickes but remain cautious on the outlook for the sector.
Want to know more about B&Q?
B&Q owner Kingfisher last week revealed full-year profits will come in at the top end of estimates.
Espirito Santo analyst Caroline Gulliver said: “Numbers are moving in the right direction, which demonstrates resilience and good management of the business in the difficult quarter.”
Investec analyst David Jeary described the profit performance as impressive and ahead of his forecasts. “The focus on profitable sales rather than sales at all costs has improved the bottom line,” he said.
However, he cautioned that the UK market remains difficult, which “could hold back profitability”.
Kingfisher’s total sales were flat at £2.3bn in the 13 weeks to January 29, while like-for-likes edged up 0.6%.
Total sales in the UK and Ireland rose 0.7% to £954m. Like-for-likes were flat. B&Q’s total sales were also flat at £835m. Like-for-likes slipped 0.3%, “reflecting adverse weather in December and a weak market in the UK and Ireland”.
Total sales at the international arm climbed 2.6% to £455m but fell 1.1% on a like-for-like basis. The retailer notched up a quarterly profit at its previously underperforming Chinese business.
Kingfisher group chief executive Ian Cheshire said: “We have ended another challenging year in robust shape. Our programme of self-help initiatives has continued to deliver profit growth and higher returns while strengthening the business for the future.
“Our international businesses delivered strong growth in the final quarter, more than offsetting some weather disruption and a weak market in the UK and Ireland, sowe expect full-year profits towards the top end of the range of analyst estimates.”
Adjusted pre-tax profit estimates range from £661m to £672m.
At Wickes, owned by builders’ merchant Travis Perkins, like-for-likes were flat in 2010, rising 0.2%, but current trading has improved. Like-for-likes soared 12% in January as the retailer came up against soft comparatives because of heavy snow in January 2010. In the first three weeks of February like-for-like growth slowed to 2%, as sales in kitchens and bathrooms fell 2%.
Wickes, which said it gained share in the year, revealed total sales in 2010 up 2.3% to £1bn, driven by new store openings. The greatest share gains were made in the tradesmen’s, rather than consumer, market.
Worryingly kitchen and bathroom orders slumped 36% in February.