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LONDON (Alliance News) - Kingfisher PLC Thursday reported a rise in sales on a constant currency basis in the second quarter of its financial year, as it demonstrated growth in each of the regions in which it operates and as it continued with its strategy to create a unified 'ONE' Kingfisher.
Shares in Kingfisher were trading up 1.7% at 373.00 pence Thursday morning.
The FTSE 100-listed DIY retailer, which owns brands including B&Q, Screwfix, Castorama and Brico Dépôt, said that total sales in the 10 weeks to July 11 grew 4.8% on a constant currency basis, while like-for-like revenue rose 3.5%.
Regionally, the UK and Ireland delivered the strongest growth for Kingfisher with total sales up 6.7%, while France grew 2.6% and Other International, comprising Russia and Poland, grew 4.3%.
Analysts, however, were not encouraged by Kingfisher's update. Investec analyst Kate Calvert said that the retailer had a "solid" second quarter as the numbers were helped by weak comparables, but said she is cautious of the growth figures in Europe.
"We believe it is too early to get excited about a European recovery as the improved performance was driven by seasonal rather than core," Calvert said. "In addition, there is a material pound-euro headwind."
Like-for-like sales of seasonal products in France grew 8.3%, compared with flat like-for-likes in non-seasonal products, while Poland saw like-for-like growth of 16.5% for seasonal products, compared with 2.9% growth in non-seasonal products.
"We have delivered a solid second-quarter sales performance to date across all our major businesses, albeit against softer comparatives than in the first quarter. I am also very pleased to report that the pilot of our unified IT system, which is a key enabler of our 'ONE' Kingfisher plan, started on time in Ireland. We look forward to updating on further progress against our first 'sharp' decisions in September. And we have to date returned GBP138 million to shareholders via a share buyback since the year end," Chief Executive Véronique Laury said in a statement.
Laury, who took the helm from Ian Cheshire in December, announced a revamp under a 'ONE' Kingfisher plan in March, to try to turn the business around and boost sales and profit. These included rolling out a new, unified IT platform, putting a new management team in place, closing around 60 B&Q stores and opening around 60 new Screwfix stores.
On Thursday, Kingfisher said that Screwfix is on track to have opened 11 new outlets during the second quarter, taking the total number of Screwfix stores to 412.
Meanwhile, Davy Research analyst Flor O'Donoghue also was cautious of Kingfisher's update.
"Our cautious view on Kingfisher is framed on concerns about the medium-term prospects for the business. In particular, we are concerned about the structural headwinds facing the traditional DIY sector, challenges which are amplified for Kingfisher as it attempts an aggressive reboot via the 'ONE' Kingfisher strategy," he said.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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