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LONDON (Alliance News) - Kingfisher PLC on Thursday reported a drop in total revenue in the first quarter of its financial year as it was hit by adverse currency movements, but said it is making good progress with its turnaround plans following Veronique Laury's appointment as the company's new chief executive.
Kingfisher is the second best performer in the FTSE 100 midday Thursday, trading up 3.3% at 378.90 pence.
The DIY retailer, which owns brands including B&Q, Screwfix, Castorama and Brico Dépôt, reported total sales of GBP2.59 billion for the 13 weeks to May 2, which is a 4.6% decline on the same period the year before, but would have been an increase of 2.7% had exchange rates remained constant. Like-for-like sales were up 0.8% on a constant currency basis.
Kingfisher said that retail profit in the period was GBP150 million, down 4.8% after being hit by GBP10 million in adverse foreign exchange movements on the translation of non-sterling profits and GBP7 million in charges for new country development activity. Retail profit was up 1.4% at constant currencies.
Total sales were up 2.9% in the UK & Ireland to GBP1.24 billion as a strong performance from Screwfix offset a revenue decline in B&Q. However, sales were down 11.5% in France to GBP953 million, reflecting a softer market hit by a slowdown in house building. In Other International, which comprises Poland, Russia and Spain, total sales were down 8.4% to GBP402 million.
On a like-for-like basis at constant currencies, sales in the UK & Ireland were up 1.6% in the period, while sales in France were still down 1.2% on that basis and Other International sales rose 3.8%.
"We have made a solid start to the year against strong comparatives. In the UK, B&Q continued to grow sales volumes and Screwfix delivered an excellent performance, opening its 400th store in May. In France, our businesses performed broadly in line with the market," Laury said in a statement.
"We are also making good early progress with our 'ONE' Kingfisher plan to unlock our potential by creating a single, unified company where customer needs come first. Our first 'sharp' decisions are being worked on at pace," she added.
Laury, who took the helm from Ian Cheshire in December, announced the revamp in March to try to turn the business around and boost sales and profit. These included closing around 60 B&Q stores, rolling out a new, unified IT platform, and putting a new management team in place.
On Thursday, Kingfisher said it has exchanged contracts for the disposal of leases on 14 of its B&Q stores earmarked for closure, and that the pilot of its unified IT system is on track. Arja Taaveniku also joined the company in May as chief offer and supply chain officer.
Kingfisher added that it has returned GBP88 million as part of the GBP200 million share buyback planned for the current financial year.
Cantor Fitzgerald analyst Freddie George highlighted limited growth prospects in Kingfisher's two core markets of the UK and France, although he said he forecasts some bounce-back in the French business. However, he added that the company has a relatively strong balance sheet following the disposal of its 70% stake in its loss-making Chinese business.
"This should enable it to buy back shares over the medium term, accelerate dividend growth over the next three years, and restructure the UK property portfolio," George said.
Investec analyst Kate Calvert was less optimistic, warning against continued tough trading for the retailer.
"Although some progress has been made on 'ONE' Kingfisher, the long-term benefits will take multiple years to realise in our view. We acknowledge that there is some degree of cashflow and yield support, but see better value elsewhere in the sector," Calvert said.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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