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Kingfisher disappoints in Q2 as spending weakens

The home improvements retailer reported anaemic sales during the second quarter, as it continues along its five-year turnaround plan
August 18, 2017

Kingfisher's (KGF) French business continued to be a thorn in its side during the three months to July 2017. The home improvement retailer reported a 3.8 per cent like-for-like fall in sales at constant currency to £1.2bn in France. This was most pronounced at its Brico Dépôt brand, where revenue was down 5.1 per cent, while sales at the Castorama business fell 3.8 per cent. Go further afield and the picture was no better. Sales in Russia fell by more than 10 per cent, while revenue in Spain was down 4.8 per cent.

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The domestic business was not immune to poor sales over the period, either, with B&Q in the UK and Ireland reporting a 4.7 per cent decline in like-for-like sales. Management blamed this on poorer weather compared with the same time in 2016. Screwfix continued to be the standout performer, growing sales 11 per cent. However, this was not enough to offset the problems at B&Q, with overall sales in the UK and Ireland down 1 per cent to £1.3bn.

Chief executive Véronique Laury said that self-help plans are already in place to help support performance this year, the second of the 'One Kingfisher' five-year recovery plan. This year was always expected to be challenging due to the ongoing overhaul of the business. One of the main objectives is to clear out old products ranges and replace them with new ones under a unified in-house brand, along with updating IT systems. This is part of the overall effort to deliver a £500m annual boost to adjusted profit by the end of 2020. 

Analysts at the Share Centre said “not much has really changed” for Kingfisher. The retailer seems to be suffering as consumers are increasingly hiring professionals for work around the home rather than taking the do-it-yourself approach. 

However, UK retailers in general face weaker consumer spending. Retail sales grew just 1.3 per cent in July, compared with 2.8 per cent last year, according to the Office for National Statistics.