2nd UPDATE:Praktiker Warns Of Sales Decline,Keeps Profit Target

22nd Jul 2010 12:14

(Adds executive, analyst comment and detail.) By Archibald Preuschat Of DOW JONES NEWSWIRES DUESSELDORF (Dow Jones)--Home improvement chain Praktiker Bau- und Heimwerkermaerkte Holding AG (PRA.XE) Thursday posted a 26% drop in second-quarter net profit as bad weather hit sales, and said full year sales will also be affected although it maintained its 2010 profit guidance. The company expects full-year sales to decline by a low single-digit percentage from EUR3.66 billion in fiscal 2009, in contrast to previous guidance of flat sales. Still, Chief Executive Wolfgang Werner maintained his view that 2010 adjusted earnings before interest, tax and amortization will be "significantly above" fiscal 2009 due to restructuring measures and less discounting of products. Praktiker's net profit for the three months to the end of June fell to EUR25.8 million from EUR34.6 million a year earlier. Praktiker said it booked restructuring charges of EUR3.4 million related to its cost-cutting program, Praktiker 2013, and a EUR9.5 million provision for a potential cartel fine in Poland. Werner said the long spell of bad weather during the second quarter strongly affected the seasonal gardening business in April and May, while economic conditions abroad only improved slowly. Second-quarter revenue declined 5.6% to EUR1.04 billion. Europe's biggest home improvement retailer Kingfisher PLC (KGF.LN), also said Thursday it remains cautious on the outlook for consumer spending after reporting a fall in second-quarter same-store sales. BHF Bank analyst Peter Steiner said Praktiker's results are "mixed" and the question now is how its business in Eastern Europe will develop. Eastern Europe has previously accounted for 30% of overall sales and 60% of operating results. Praktiker Chief Financial Officer Thomas Ghabel said in a conference call that the home improvement retailer's performance has improved from month to month so far this year. In January international sales were down 14% while in June there were up 5% compared with the previous year. Praktiker said it will further reduce the number of discount promotions in Praktiker shops in Germany, which will hurt sales and could sacrifice market share but should boost margins. Werner said around 12 promotional days are planned for the remainder of 2010 compared to 19 in 2009. In the first six months Praktiker had 25 promotional days compared to 43 in the year earlier period. However, Praktiker's restructuring measures are starting to have an effect and Werner is optimistic that the second half performance will be fueled by operations abroad and a stronger focus on margins in the company's home market of Germany. At 1051 GMT Praktiker's shares traded up 0.4% at EUR5.48 but was underperforming Germany's mid-cap index MDAX, which was up 1.5%. -By Archibald Preuschat, Dow Jones Newswires; +49 211 13872 18; [email protected] (END) Dow Jones Newswires July 22, 2010 07:14 ET (11:14 GMT)