LONDON (Reuters) - Kingfisher (KGF.L), Europe’s largest home improvement retailer, reported a small fall in underlying sales in its latest quarter, with a weak performance in France only partially offset by strong growth at Screwfix in Britain and in Poland.
The group is in the second year of a plan to boost annual profit by 500 million pounds from 2021. The plan, costing 800 million pounds over five years to deliver, includes unifying product ranges and further developing e-commerce.
Shares in Kingfisher have fallen 17 percent over the last year on concerns over the scale of the restructuring and the company’s ability to deliver it.
They fell up to 1.8 percent on Tuesday after the group, which runs B&Q and Screwfix chains in Britain and Castorama and Brico Depot in France and elsewhere, said like-for-like sales slipped 0.5 percent in the three months to Oct. 31. They had fallen 1.9 percent in the previous quarter.
Like-for-like sales in Britain and Ireland rose 1.5 percent but they fell 4.1 percent in France.
Kingfisher said it remained comfortable with full-year 2017-18 consensus underlying pretax profit expectations of 785 million pounds, down from 787 million pounds in 2016-17.
“We still see risks to big ticket spend in the UK and execution risk with its unified offer strategy, but further cost savings should support the P&L,” said RBC Europe analyst Richard Chamberlain, who has a “sector perform” rating.
UK consumers’ spending power is being squeezed as inflation rises and wage growth falters. The Bank of England this month raised borrowing costs for the first time in a decade.
Last month Kingfisher’s main British rival Homebase, owned by Wesfarmers unit Bunnings, said first quarter sales slumped 17.5 percent, blaming large-scale clearance of discontinued stock and tough trading conditions.
In the UK, Kingfisher’s Screwfix chain, focused more on serving professional builders, remained the star performer with like-for-like sales up 10.2 percent. B&Q sales fell 1.9 percent. Like-for-like sales in Poland rose 6.0 percent.
“We remain confident in our ability to deliver our long-term plan and in the financial and customer benefits it will generate,” said Chief Executive Véronique Laury.
Reporting by James Davey; editing by Kate Holton/Keith Weir