Travis Perkins’ profit warning last week again sparked fears about the impact of the downturn on home and DIY retailers.
The builders’ merchant and owner of DIY chain Wickes warned profits would be at the low end of expectations. Like-for-like sales at Wickes dropped 2.6 per cent in the 39 weeks to September 27, when turnover increased 1.2 per cent.
Pali International analyst Nick Bubb warned: “Like-for-like sales are fading and the read-across from Travis’s update can’t be good for B&Q.”
Last week, the BRC’s latest monthly sales data showed that furniture retailers suffered their worst performance for at least eight years, as the housing market weakness continued to hit big-ticket homewares specialists. It also revealed that declining consumer confidence and the housing market had continued to hit DIY sales, particularly those relating to big projects.
Bubb was concerned that, in Kingfisher’s case, it has to contend with other factors in its international business as well as a troubled domestic market.
Noting the recent adverse 10 per cent move in the UK-Polish currency rate, Bubb feared that “the favourable foreign exchange translation affects Kingfisher’s overseas operations”.
The implications of the slowdown for furniture and homewares retailers may become clearer next week, when market leader Carpetright issues a pre-close statement.
Shore Capital analyst John Stevenson said the carpet market remains weak due to “overriding macroeconomic pressures on consumers and households”.
Last month he downgraded Carpetright’s profit expectations for 2009 from£49 million to£42.1 million after the retailer reiterated that “this year would be one of the most difficult Carpetright has experienced”.
- Home Retail Group has written down the value of its Homebase DIY chain by£542 million. Homebase’s first-half profit plunged from£47 million the year before to£29.5 million and like-for-likes tumbled 10.3 per cent.