Kingfisher nails first quarter as Laury's repairs gain traction

DIY retailer Kingfisher put together a solid start to the year, with 6.2% like-for-like growth in B&Q and Screwfix stores in the UK and Ireland contributing to 3.6% group growth to £2.7bn.

While LFL sales in France continued to show evidence of slow recovery, up 0.2% at constant currencies, Poland was also solid at 10.8% and made up for declines in the smaller Russian and Spanish businesses.

Within the UK and Ireland, B&Q LFL sales were up 3.6%, though due to the fat-trimming closure of 10 stores during the period, meaning 40 of the 65 planned are now gone, total sales were down 4.2% to £951m.

Trade outlet chain Screwfix grew total sales 23.5% to £301m, with LFLs up 16.2%.

There was also good progress in chief executive Véronique Laury's ambitious five-year strategic repair job, including the installation of a new store IT system across the estate, while a June launch is looming for a new 'offer and supply chain organisation'.

"We have made a solid start to the year, trading in line with expectations," said Laury.

"In addition, I am pleased with the early progress we are making on our operational milestones for this year, the first year of our ambitious five year plan. We continue to feel confident in our ability to deliver our plan, based on putting customer needs first, supported by the expertise and enthusiasm of our colleagues."

During the quarter to 30 April, £78m of the previously announced £600m share buyback was made.

Broker Cantor Fitzgerald said as a result of the update it had upgraded forecasts to £705m from £690m, partly to reflect a change in assumptions on the sterling euro rate, taking EPS up to 22.8p from 21.9p, and making similar upgrades to its forecasts for next year to £730m and 23.9p respectively.

Cantor said the outlook for French DIY was "more encouraging" as planning consents and housing starts begin to recover after four years in decline while the Banque de France DIY sales are reported to have increased by over 2% in quarter ended April.

"The significant change to the operational board over the last three years is, we believe, leading to a major shift in the company’s culture and strategy. There is also a growing acceptance that after a number of ‘false dawns’, the ranges and the assortments of the international businesses have to be more properly integrated and the diversity of its cross border formats reduced," analysts wrote, adding that their initial scepticism over management was abating.

George Salmon at Hargreaves Lansdown said the sales growth at B&Q was "decent". He also noted that it was too early to see the competitive impact of the sale of rival Homebase to Wesfarmers earlier this year, though it was set to be an "increasing challenge".

“The home improvement market is growing and buoyant sales at Screwfix reflect an increasing trend to call a man in rather than DIY. We are seeing the same in France with the consumer-facing business Castorama going backwards while trade-focused Brico Depot, put in a decent performance."

He added: "Kingfisher are nicely placed to benefit from a recovery in France and wider Europe, if and when it happens.”

Shares in Kingfisher flew 2% higher in early trade on Tuesday to 368.1p.