Kingfisher maintains forecasts after mixed first quarter

DIY conglomerate Kingfisher reported a mixed performance in the first quarter despite weak comparatives in some markets, but said that its profit guidance for the full year remained unchanged.

Group sales rose by 1.7 per cent using constant exchange rate during its first fiscal quarter to April 30, or by 0.8 per cent on a same-store basis.

In the UK and Ireland, where the previous year’s sales were disrupted by unusually cold weather, sales at B&Q were up 2.8 per cent on a like-for-like basis — but that included a weather-related boost of 6 per cent. Sales at Screwfix, which primarily serves the building trade, were up 9.6 per cent. 

Sales at its two French brands remained relatively weak, with same-store sales down 3.7 per cent. The company has for some time been struggling with its French operations. At the time of its full-year results, it acknowledged that its ambitious transformation plan had been a distraction, and pledged renewed action to reinvigorate Castorama in particular.

However, in the first quarter it was Brico Dépôt that provided the drag, with sales there falling 5.1 per cent like-for-like. Kingfisher blamed this on “the proactive reduction of low margin special promotional activity.”

Sales grew much more strongly in Poland and Romania. 

Chief executive Veronique Laury said that sales of unified ranges — a key part of the transformation plan — continued to grow ahead of non-unified ranges.  

“This year we are focused on completing the building of our 'engine' and making our innovation more visible to customers,” she said. “We are also excited to be launching several new ranges this year which are unique to us and will further differentiate us from our competitors.”

The company is also showcasing a new convenience store concept to analysts today at an “innovation day”.

“We remain confident in our ability to deliver significant financial benefits over time,” said Ms Laury.

She has indicated that she will be stepping down in the coming months, and a search for her successor is already under way. The “One Kingfisher” strategy that she launched in 2015, aiming to unify the company’s ranges, overhaul its IT systems and cut costs, looks increasingly unlikely to deliver the promised £500m of additional annual profit.

Ms Laury said in March that the target “no longer reflected the way the company is managed” and that setbacks in France had partly offset improvements achieved through the transformation programme.