Kingfisher Q2 sales slow despite UK improvement
Chief executive Veronique Laury called the group like-for-like (LFL) sales rise of 3% a "solid" sales performance, after the 3.6% gain in the first quarter, adding that management "remain cautious on the short-term outlook" with increased uncertainty from the Brexit vote although there had been no clear evidence of any impact on demand so far.
Total UK and Irish sale of £1.36bn in the three months to July 31 were up 5.1% at the reported level and 5% at constant currencies, while LFL sales at constant currencies accelerated to 7.2%, up from 6.2% in the first quarter.
B&Q gained 5.6% at the LFL level, better than its 3.6% in the first quarter, while Screwfix surged 13.3% in the second quarter, down from 16.2% in the first.
The effect of faster growth at the trade-focused outlets on product mix was one of the reasons given why UK gross margins are expected to slide 100 basis points for the first half of the year.
However this will be slightly compensated by French and Polish gross margins would be up by 50 and 150 basis points respectively.
LFL sales at Castorama and Brico Depot in France, however, fell 3.2% at constant currencies, as widespread industrial action and exceptionally wet weather hit trading, after the encouraging 0.2% increase in the first three months of the financial year.
Poland remained a fairly bright spot, with LFL sales up 7.3%, although this was down from the 10.8% in the first quartr.
Kingfisher also confirmed that it had completed the disposal of its remaining 30% economic interest in B&Q China, following regulatory approval there, with net cash proceeds of £63m received. ■