Damp spring rains on B&Q parade

Kingfisher, the owner of DIY chain B&Q, has blamed poor weather and Easter falling earlier this year for a fall in UK sales over the 13 weeks to 3 May.

Like-for-like sales at B&Q, Screwfix and Trade Depot stores in the UK were down 7.9% and profits fell too.

But strong trading in Eastern Europe helped the group to increase total pre-tax profits by 9% to £96m.

The firm has embarked on a major turnaround programme, cutting its forecast for annual group sales growth.

"In a busy first quarter, we have reworked our 2008 budgets to reduce our reliance on sales growth in what could be a challenging year, and put in place an overall plan with a clear target for the next three years," new chief executive Ian Cheshire said.

But Kingfisher, which also owns Castorama and Brico Depot in France, said it was keeping earnings targets and anticipated net debt for the 2008/09 financial year unchanged.

Its shares initially rose, then erased gains to fall 2.1 pence, 1.5%, to 136.70p.

Shake-up

The group, under new chief executive Ian Cheshire, has taken radical steps to revive the firm's fortunes, including slashing overheads and opening new stores in France, Russia, Poland and in Turkey.

At its underperforming China operations, five loss-making stores will shut and three will be downsized in the coming year, with further reductions to follow to return its China business to profit by 2009/10.

It also said that incentives had been put in place to reward management if certain profit and share price targets were met over the next three and four years.

No further details were given, but newspaper reports have suggested that the bonus scheme will be similar to how private equity firms operate and could prove controversial with shareholders.

B&Q revamp

UK DIY chains have suffered as higher interest rates, steeper mortgage repayment costs and a slowdown in house purchases hit home-related spending.

But Mr Cheshire said that new B&Q product ranges, including kitchens and bathrooms, and a revamp of its stores helped to attract shoppers in the past quarter. He blamed the sales slump on lack of demand for outdoor furniture.

He said profit recovery in the UK would be at the centre of the restructuring effort.

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