Adrian Hargrave, CEO of SEEEN, explains how the new funds will accelerate customer growth Watch the video here.
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Positive Points: Management remains confident that its programme of self-help initiatives, 'Creating the Leader', will see the company emerge as "a world class retailer at helping customers have better, more sustainable homes" Unlike UK rivals, the group enjoys geographical diversification, including Emerging Markets such as China, Poland and Russia. Additional marketing and promotional activity helped encourage customers to switch some of their activity to internal repairs and projects, partially offsetting the weather-related weakness, particularly in the UK, reported management. The retailer is seeking growth in countries including Poland and Russia to help offset declines in Britain. Sales in Poland rose 1.5% and revenue increased 48.5% in Russia. Kingfisher has a successful track record with dominant strategic positions in the UK and France.
Negative Points: Retailers are suffering as consumers' disposable incomes are squeezed by inflation, muted wages growth and government austerity measures. The implications of the Euro zone crisis remain a concern. Potential moves into new markets – a target in the group's next growth self help programme – pose risks. In France, Brico Depot sales were weak, in part affected by the timings of public holidays but also its exposure to outdoor/seasonal sales impacted by the weather. A weaker UK housing market is likely to directly affect DIY demand patterns. Changes in retail planning legislation could restrict Kingfisher's store opening ambitions.
Financial Highlights: Total sales in UK & Ireland were up 5.0% with B&Q total sales up 4.9%. Underlying sales at Castorama France fell 0.2% after a fall of 0.8% in the previous quarter, while sales fell 4.8% at Brico Depot, following a rise of 2.4%. Overall sales in International stores grew 9.3%.
Second quarter trading update: Kingfisher is on an improving trend, which is some achievement given the dual headwinds of consumer austerity and poor seasonal weather. The company maintains that consumers have decided to switch to indoor projects, which has mitigated some of the sales lost to the traditional outdoor products at this time of year. However, this has also resulted in some margin pressure at B&Q, as some lines have had to be reduced in price to clear. In addition, the level of competition has intensified given the troubled economic backdrop. Kingfisher has, nonetheless, continued to drive down costs, particularly through more prudent product manufacturing whilst it is well positioned to benefit from any upticks in consumer spending. All things considered, this is a reasonably strong update. The shares have come under some pressure in early trade, adding to the 10% loss over the last three months (as compared to a 1% drop for the wider FTSE100), most likely through investors looking to book some profits. The bigger picture has been more positive, however – the shares have risen 10% over the last year, whilst the FTSE drifted 1% in that period. On balance, investors remain very keen on Kingfisher's strategy and the general consensus of the shares as a strong buy is unlikely to be troubled.
Typo below wrong board................... Kingfisher is a major home improvement retail business with operations across the UK, Ireland, Continental Europe and Asia. It operates over 950 stores in eight countries across Europe and Asia (including China). Its main retail brands are B&Q, Castorama, Brico Dépôt and Screwfix. Kingfisher also has a 50% joint venture business in Turkey with the Koç Group, and a 21% interest in, and strategic alliance with, Hornbach, Germany's leading large format DIY retailer. The group employs over 65,000 staff and is and is a constituent of the FTSE 100 Index.
The Group's principal activities are exploring for, developing, producing and processing minerals, oil and gas. The Group's operations are divided into nine business divisions. Base Metals focuses on copper, silver, zinc, lead, uranium and copper by-products including gold. Petroleum focuses on hydrocarbons covering oil, gas and liquefied natural gas. Aluminium relates to bauxite, processing and marketing of aluminium and alumina. Iron Ore focuses its mining activities in the areas of Western Australia and Brazil. Energy Coal focuses on energy coal for use in electricity generation. Metallurgical Coal operates three underground coal mines in Australia. Manganese focuses on alloys, ores and metals. Stainless Steel focuses on nickel minerals which are used in the production of stainless steel. Diamond and Specialty Products operates a diamond mine in Canada and an integrated titanium smelter/mineral sand mines in South Africa. The group employs around 41,000 people working in over 100 operations in 25 countries.
B&Q owner Kingfisher (KGF) reported a rain soaked first quarter at the end of May, which given the dire weather since then doesn’t bode well for the forthcoming update. But with the retailer's first quarter total sales in the 13 weeks to April 28th down 3.6%, (1.3% on a constant currency basis) and like-for-like sales down 4.8%, bulls will be hoping that in taking the red pens out recently, brokers may have overstated the downside risks, especially now with the stock down 15% off the best levels of the year at 270p.
In a preview of Kingfisher's second-quarter update next week, Jefferies has retained its 'buy' recommendation and 360p target price for the do-it-yourself retailer.
Panmure Gordon reiterated its "buy" recommendation for Kingfisher (KGF) with a 350p target price. The broker previously expected the DIY specialist's B&Q business to report like-for-like sales growth of 4% in the second quarter, recovering from an 11.7% decline in the first. However, in light of the heavy rain, Panmure now forecasts growth of just 1%, noting that 40% of B&Q's sales are related to outdoor activities. However, the broker added that, despite these downgrades, the shares trade on a prospective multiple of just 11 times for 2013. Kingfisher shares advanced by 5.4p to 274.1p.
Ian Cheshire, Chief Executive Officer of do-it-yourself retailer Kingfisher, has sold 994,482 shares in the company after earning them through the Performance Share Plan and the Kingfisher Incentive Share Scheme. Cheshire earned himself £2.87m after selling the shares for 288.42p each. He now has just under 1.13m shares in the company. He sold the shares to meet his tax liabilities following the exercise of the shares and to diversify personal finances. At the end of May the company posted a 3.6% decline, or 1.3% on a constant currency (CC) basis, in total sales for the 13 weeks to April 28th from a year earlier at £2,632m, as poor weather across Europe affected footfall. Like-for-like (LFL) sales were down 4.8% on a CC basis. The share price is up six per cent over the past year, and four per cent in the past month.
Kingfisher: Nomura reduces target from 340p to 325p, buy rating kept.
Ian Cheshire, Chief Executive Officer of do-it-yourself retailer Kingfisher, has sold 994,482 shares in the company after earning them through the Performance Share Plan and the Kingfisher Incentive Share Scheme. Cheshire earned himself £2.87m after selling the shares for 288.42p each. He now has just under 1.13m shares in the company. He sold the shares to meet his tax liabilities following the exercise of the shares and to diversify personal finances.
From BBC today: Argos like-for-like sales to 2 June = 0.2% in the period . Homebase sales falling by 8.3%. The sales fall at Argos compares with an 8.5% drop in the previous quarter. Analysts had forecast about a 4% fall this time. At Homebase, seasonal products, which account for some 40% of sales, fell by about 15% after the wet start to the summer. The fall in like-for-like sales was worse than the 6.5% drop in the previous quarter.
Won't be long until this reaches 300+...
Positive Points: With the first quarter typically one of the least significant of the year and with the key summer season still ahead, management remains confident that the company is well prepared to capitalise on any improvement in conditions and deliver a solid full year result. The board noted that "we are making progress with our new programme of self-help initiatives, 'Creating the Leader', aimed at helping our customers have better, more sustainable homes and building a more valuable business for our shareholders." Management's 'Delivering Value' programme over the last four years helped adjusted pre-tax profit more than double, up from £357 million in 2007/08 to £807 million in 2011/12. The detailing of plans for the next five years are estimated to generate an additional £300 million on an annualised basis. Directors remain confident that tough economic times provide it with opportunity to gain market share. Management initiatives to reduce group costs are ongoing. Unlike UK rivals, the group enjoys geographical diversification, including Emerging Markets such as China, Poland and Russia. For B&Q China, losses reduced to £5 million (2011/12: £7 million reported loss) reflecting continued tight cost management in what is traditionally the weakest trading quarter of the financial year, impacted by Chinese New Year. The group should benefit from any recovery in housing markets such as the UK and Ireland.
Negative Points: Same store or like-for-like sales for its UK and Irish division declined by 6.9% on a constant currency basis. Same store sales in France declined from +4.2% in the fourth quarter to +0.7% in the first quarter. Potential moves into new markets – a target in the group’s next growth programme – pose risks. B&Q China sales declined by 6.8% to £67 million (-6.0% same store) reflecting one less store compared with the first quarter last year and a more challenging housing market than anticipated. Perceived growth markets such as China could be targeted by industry giants such as Home Depot of the US.
Financial Highlights: Total group sales declined by 3.6% to £2.63 billion, whilst same store sales on a constant currency basis fell by 4.8%. Profit fell by 8.6% to £160 million - 5.5% when adjusted for currency movements. The total dividend over the last financial year was increased by 25% compared to the prior year.
First quarter trading update: Kingfisher held up the weather as a reason for a damp and dreary update. Against strong comparatives, a 3.6% drop in total sales and 8.6% decline in profits reflected the perils of currency conversion, as well as the ongoing hurdles being provided by the Eurozone. In particular, trading in the UK and Ireland was anaemic, whilst the French contribution was weaker than in previous quarters. Set against this, management was hopeful that the worst was now over for the year as the first quarter is traditionally its weakest. The slowdown in sales had allowed time to focus on cost reduction and margin improvement, whilst the company's track record of delivering superior returns in tougher times should assist.
Kingfisher is a major home improvement retail business with operations across the UK, Ireland, Continental Europe and Asia. It operates over 950 stores in eight countries across Europe and Asia (including China). Its main retail brands are B&Q, Castorama, Brico Dépôt and Screwfix. Kingfisher also has a 50% joint venture business in Turkey with the Koç Group, and a 21% interest in, and strategic alliance with, Hornbach, Germany's leading large format DIY retailer. The group employs over 65,000 staff and is and is a constituent of the FTSE 100 Index.
Ian Cheshire, Group Chief Executive, said: "We anticipated the first quarter would be challenging, compared with last year's strong growth which was boosted by favourable spring weather and public holidays. But an extremely wet April this year in the UK and France compounded the difficulty, adversely impacting sales of outdoor and seasonal categories. "Given this unfavourable backdrop, we focused hard on our margin and cost initiatives and were able to significantly limit the profit impact. With the first quarter typically one of the least significant of the year and with the key summer season still ahead of us, we remain confident that we are well prepared to capitalise on any improvement in conditions and deliver a solid full year result. "We are also making progress with our new programme of self-help initiatives, 'Creating the Leader', aimed at helping our customers have better, more sustainable homes and building a more valuable business for our shareholders."
Highlights in constant currencies: · Sales and profit impacted by record adverse weather in the UK and across continental Europe, compounded by the comparison with a favourable Q1 this time last year · Seasonal sales across the Group were down 22% impacting profit by around £29 million. However, on-going gross margin and cost initiatives helped limit the Q1 overall profit decline · Net cash was £165 million (30 April2011: net cash of £283 million)
http://www.investegate.co.uk/Article.aspx?id=201205310700114702E
"We expect a similar story in France, where April was the wettest for 60 years. Here, we look for a LFL decline of around 1% after a decent start to the year. We expect International markets to be flat in like-for-like terms (strong Russia; weak Poland and Spain)," the broker added.
"We expect to see an 11% fall in B&Q's like-for-like [LFL] sales, due to the impact of tough comparisons (late Easter, hot weather), compounded by the effect of the rain upon seasonal ranges," Panmure Gordon revealed, adding that April was the wettest in the UK for a century.
"Strong progress on the gross margin front should limit the damage," the broker reckons. "In addition, the increasingly variable nature of staff costs is set to have provided further downside protection, particularly in the UK," it added. Panmure Gordon notes that the first quarter is not particularly an important one for Kingfisher.