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Banks, Financial

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Categorized | Currencies

Kingfisher sales growth held back by poor performance in France

Posted on November 22, 2016

This is becoming a familiar pattern.

Underlying sales growth at Kingfisher, the DIY retailer behind chains such as B&Q and Screwfix, was held back in the third quarter by continued poor performance at its French business.

Like for like sales across the group grew 1.8 per cent in the three months to October 31, a slowdown from the 3 per cent growth seen over the previous quarter.

While sales in the UK, particularly at the Screwfix chain, continued to prove robust, like for like sales at Kingfisher’s French business fell 3.6 per cent, a further deterioration from the 3.2 per cent fall reported in the second quarter.

Kingfisher owns Castorama and Brico Dépôt in France and sales across the home improvement market as a whole have been falling. However Kingfisher’s brands are also underperforming the wider market, according to Banque de France data.

Sales in the UK and Ireland rose 5.8 per cent in the third quarter on a like for like basis – which also strips out currency movements – driven by a 12.7 per cent surge in sales at Screwfix. Poland was again another bright spot, with like for like sales improving 6.7 per cent in the latest quarter.

Total group sales came in at £2.96bn for the quarter, slightly better than the £2.94bn forecast by analysts. The company has also been helped by the sharp fall in the pound since the Brexit vote. At actual exchange rates, total sales – which take into account new store openings – were 11.5 per cent higher but stripping out currency movements, they were up just 1.3 per cent.

Véronique Laury, chief executive, said:

Q3 trading conditions have followed a similar trend to the first half. We have delivered another solid sales performance overall, trading in line with expectations. Sales have been driven by Poland and the UK, especially Screwfix, offset by softer sales in France.

In the UK, Ms Laury has been closing B&Q outlets but expanding Screwfix while she has also been simplifying the company to reduce overlap under a plan referred to as “one Kingfisher”.

She added on Tuesday:

We continue to make good progress on our strategic milestones in the first year of our five year ONE Kingfisher transformation, and remain on track. In addition, we are gearing up for next year when the level of transformation activity will significantly increase. We remain confident in our ability to deliver our ambitious plan, based on always putting customer needs first, supported by the expertise and energy of our colleagues.