B&Q sales slide hits Kingfisher

Fewer people are moving or renovating their homes

Cooling UK consumer demand has claimed another casualty with B&Q-owner Kingfisher reporting a 15.6% profits fall for the three months to 30 April.

Like-for-like sales at the Kingfisher group were down 5.7%, while retail profits fell to £125.9m ($230m).

The figures followed the firm's profit warning in March, and the group said conditions remained challenging.

The slow housing market and poor spring weather saw like-for-like sales at home improvements group B&Q fall by 7.7%.

Sales of garden products, which account for 40% of B&Q's turnover, were hit particularly hard, Kingfisher said, while the early Easter period was blamed for weak sales of kitchens, bedrooms and bathrooms.

Spending slow

Kingfisher said its fortunes had been hit by the UK consumers' response to higher interest rates, higher taxes and pension contributions and rising fuel bills.

Trading in the first three weeks of our second quarter continues to be challenging in the UK and France Gerry Murphy, Kingfisher chief executive See Kingfisher's share price

The Land Registry recently reported a sharp drop in the level of home sales, and other surveys from mortgage lenders have suggested that the market is cooling or even stagnant.

Consequently, the home improvements industry is struggling in line with the rest of businesses on the High Street.

Kingfisher said it remained cautious about prospects for the rest of the year.

"With the key summer season still to come, it is too early to judge the outlook for the full year," said chief executive Gerry Murphy.

"Trading in the first three weeks of our second quarter continues to be challenging in the UK and France."

No break-up

Business at Kingfisher's other major UK business, mail order group Screwfix Direct was more buoyant, with sales up 0.8% because of a higher proportion of trade customers who are less cautious than the average consumer.

Kingfisher also owns Castorama and Brico Depot in France and has stores across Europe and Asia.

In France, profits were 7.4% lower at £40.2m. Castorama sales fell 4.4%, again hit by poor weather. However, discount builders' merchant Brico Deport fared much better with a 26.2% rise in turnover.

Sales in Poland, Italy and China fell 17.6% on a like-for-like basis.

In a conference call following the results announcement, Kingfisher's Gerry Murphy said there was no substance to market speculation that he was mulling over either a possible break-up of the group or a demerger of B&Q.

"We have no plans to break up the business, and we're not talking to anyone about this," he said.