Kingfisher beat analysts’ forecasts with its first-quarter trading update and wants to capitalise on the Irish market now that rival Wickes has halted its expansion plans there.
Group retail profit surged 38.5 per cent to £128m in the 13 weeks to May 2 as seasonal products and good weather lifted sales. The consensus forecast was about £94m. Total group sales rose 2.4 per cent to £2.6bn but like-for-likes slid 1.7 per cent.
Like-for-likes at the UK arm – which includes B&Q and Screwfix – rose 0.9 per cent and total sales increased 2.9 per cent to £1.2bn. UK profit rocketed 89.2 per cent to £61m thanks to higher sales volumes, and margin and cost improvements.
Singer analyst Matthew McEachran said that Kingfisher had produced “an excellent result and way ahead of expectations”.
Group chief executive Ian Cheshire said: “DIY is becoming cool again. We have made a good start to the year, boosted by better weather and a later Easter.”
B&Q operates nine stores in Ireland, which Cheshire said was “the most depressed consumer market I can see”, but added: “There’s more to come out of it so we’re looking at further site developments. The competitive position is improving, with Wickes stopping its expansion. Any time a competitor scales back expansion plans is good news.”
B&Q’s like-for-likes increased 3.2 per cent while total sales rose 4.6 per cent.
At Kingfisher’s French arm – which includes Castorama and Brico Dépôt – like-for-likes declined 2.8 per cent while total sales increased 1.7 per cent to £1bn.
Its other international operations, including Spain, Eastern Europe and China, experienced a like-for-like sales decline of 6.3 per cent.
Kingfisher’s Eastern European business “continued to grow both sales and profit”.
China’s like-for-likes plummeted 23.5 per cent “in a weak housing market”. Losses in China increased 25.7 per cent to £14m. The retailer said its restructuring process is under way. McEachran added that the turnaround plans are “capable of delivering more upside in the remainder of the year”.
Investec Securities analyst David Jeary said Kingfisher’s numbers were “stormingly good” but he remained cautious about the trade business – Screwfix’s like-for-likes fell 6 per cent during the period.
Cheshire said: “The white van man is in pretty poor shape but there is still a very big market that we have a tiny share of.”