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Tuesday, 11 January, 2000, 15:04 GMT
Kingfisher leads retail share dive

B&Q DIY enthusiasts have boosted Kingfisher's B&Q

Woolworths owner Kingfisher has dragged down a host of retail shares after forecasting a squeeze on profits and describing the competition as getting "tougher year by year".

The chain - which also owns B&Q, Comet and Superdrug - reported bumper Christmas sales, but admitted margins were under pressure as competition continued and significant costs arose from new investments.

We are investing heavily in e-commerce
Woolworth's-to-B&Q chain Kingfisher

Chief executive Geoffrey Mulcahy confirmed many analysts' fears when he said: "Competition in the retail sector gets tougher year by year. Margins have been coming down for several years and that isn't going to change soon."

Kingfisher shares shed 7.7% to 621p soon after the announcement.

They were the worst performers in the FTSE 100 index on Tuesday morning, dragging down other retailers, such as mail-order group GUS and chemist giant Boots.

Housing market boost

Kingfisher unveiled a 30.8% jump in business in the Christmas season.

It received a big boost from the buoyant housing market, creating demand for home goods and improvement products.

Kingfisher said in the nine weeks to 1 January, like-for-like sales growth was 6% but an acceleration in investments will mean at least 21m will be cut from bottom-line profits in the full year.

Superdrug Price competition hit sales at Superdrug

The group opened new stores last year, and is due to open more "Big W" out-of-town centres. It also took over several businesses during the year.

Sir Geoffrey said: "We are investing heavily in e-commerce and other new channels throughout the group and expect our revenue cost in this area to exceed 21m in the current year."

At B&Q, like-for-like sales were up 11.9% over the nine-week period.

Demand for electrical goods at Christmas spurred trading at Comet where like-for-like sales were up 6.2%, helped by strong television sales.

But like-for-like sales at Superdrug were almost flat - up just 0.6% - blamed on tough trading and fierce price competition.

Selfridges surge

Meanwhile, upmarket department store Selfridges also revealed bumper Christmas sales figures.

Selfridges enjoyed a 12.9% surge in seasonal sales at its flagship Oxford Street store.

Shoppers at the group's Manchester store were even keener to spend, with sales ahead by 31.9%.

The figures covered the Christmas period and the first week of January sales.

The Oxford Street shop had a major overhaul last year which boosted selling space by 7%.

The sales news confirms figures from the British Retail Consortium, showing high street stores enjoyed a booming Christmas.

General sales were 5.6% up in December on a year ago.

The consumer's eye for a bargain was evident in sales figures from discount retailer Matalan which saw pre-Christmas sales surge 42.9%.

Cardiff-based Peacocks also saw sales for the five weeks to 1 January jump 28%, with like-for-like sales ahead 9%.

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See also:
14 Sep 99 |  The Company File
Kingfisher profits jump
11 Jan 00 |  Business
Christmas sales bonanza
30 Mar 99 |  The Company File
Selfridges fights back

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