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LONDON (Alliance News) - Kingfisher PLC on Tuesday beat analyst expectations when it reported growth in sales in the first quarter of its financial year as the DIY retailer makes progress with its five-year plan to try and boost trading.
Shares in Kingfisher were trading up 2.1% at 368.10 pence on Tuesday morning, one of the best performers on the FTSE 100.
Last year, Chief Executive Véronique Laury, who took up the role in late 2014, announced a huge restructuring project to try to turn the business around, including the rolling out of a new unified IT platform, a new management team, plus store closures and openings.
Earlier this year, she then revealed a new five-year plan to deliver a GBP500 million annual profit uplift by the end of the fifth year, on top of the profit Kingfisher will generate from normal business.
DIY retailers have been the victim of slowing sales in recent times as more UK consumers have been choosing to hire professionals for their needs rather than attempting to do it themselves. Kingfisher has also blamed falling sales on a challenging market in France, which it said has been hit by weak consumer confidence and a declining housing and constructing market.
However, Kingfisher's plans to attempt to revive the business appear to be paying off, as on Tuesday it reported growth in sales in the three months to April 30 of 5.1% to GBP2.72 billion on the same period the year before, beating Cantor Fitzgerald's forecast of 4.6% growth to GBP2.71 billion.
Like-for-like sales growth of 3.6% at constant currencies also beat Davy Group's estimate of 2.3% and the consensus forecast of 2.4%.
Geographically, sales in France rose by 9.7%, sales in the UK & Ireland were up 1.3%, and other international sales increased by 6.0%.
Kingfisher operates under the B&Q and Screwfix brands in the UK & Ireland, Castorama and Brico Dépôt in Europe, and Koctas in Turkey.
Its performance in the UK & Ireland was saved by 24% sales growth at Screwfix, which Kingfisher said was driven by its omnichannel capability, new and extended ranges and 10 new outlets. This offset a 4.3% decline at the struggling B&Q business, which reflected store closures, Kingfisher said.
In France, sales at Castorama rose by 0.2% as a result of less promotional activity, while Brico Dépôt achieved growth of 4.5%.
Meanwhile in other international, sales in Poland rose by 13% benefiting from a "currently supportive market" and new ranges, but sales in Russia fell by 5.7% following a strong comparative period the year before.
Kingfisher said it is making progress with its operational milestones for the year, with its unified IT platform now in all B&Q stores ahead of plan and the set-up of its new offer and supply chain organisation well underway.
Kingfisher intends to create a unified business from its multiple brands, or 'ONE' Kingfisher, which will share IT systems and buying infrastructure as it leverages the scale of the business.
Meanwhile, the planned closure of 15% of surplus B&Q space remains on track, with 40 of the 65 planned stores closed. 10 of these were closed in the first quarter and all 65 aim to be closed by the end of the financial year.
Under the five-year plan, Kingfisher will return GBP600 million to shareholders over the next three years, and on Tuesday it said GBP78 million of this has been returned so far.
"We have made a solid start to the year, trading in line with expectations. 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," Laury said in a statement.
Analysts were also encouraged by Kingfisher's performance, despite the turnaround plan having received some prior criticism.
"We have regularly cautioned that the more difficult operating environment is likely to make progress relating to ONE Kingfisher more difficult. That said, the group continued to make decent progress in that regard. Thus, Kingfisher has made an encouraging start to what is an important year for the group," said Davy's Michael Mitchell.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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