UPDATE: Kingfisher Cautious On Outlook As 2Q Sales Fall

22nd Jul 2010 07:49

(Adds company, analyst comment, detail.) By Simon Zekaria Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Kingfisher PLC (KGF.LN), Europe's biggest home improvement retailer, Thursday said it remains cautious on the outlook for consumer spending after reporting a fall in second-quarter same-store sales. Chief Executive Ian Cheshire said that consumer sentiment in the U.K. remains under pressure and the group faces an "uncertain environment" across Europe, but added that the group nonetheless remains on track to meet its first-half profit expectations. Stripping out currency fluctuations, sales from stores open at least a year fell 0.8% in the 10 weeks to July 10 from a year earlier. That compares with a 1.8% fall in the first quarter. U.K. and Ireland second-quarter same-store sales fell 4.4%, with B&Q sales down 4.3%. The group said sales were hit by less promotional offers and by the rollout of Tradepoint, a service for the builders merchant industry, into large format stores. Still, fewer promotions helped boost gross margins quarter-on-quarter. Same-store sales in France rose 2.6% and sales from the Castorama brand rose 3.1%, boosted by store modernizations and favorable weather, the group said. Same-store sales in other international markets rose 0.8%, although sales in Poland fell 4.2% in a weaker market, the company said. B&Q China same-stores sales rose 8.2%, but fell 17.1% overall on a lower store count. Stripping out currency fluctuations, group sales increased 0.3%, compared with a 0.2% decline in the first quarter. Kingfisher shares closed at 223 pence Wednesday, valuing the company at GBP5.28 billion. UBS analysts said that while the company's sales are a little shy of forecasts, it has made progress on margins. Kingfisher only gave sales figures in its trading statement. It will report full interim results on Sept. 16. Kingfisher is Europe's biggest home improvement retailer by sales and the third-largest in the world with more than 830 stores in eight countries in Europe and Asia. Its main brands are B&Q, Castorama, Brico Depot and Screwfix. The company also has a 50% joint venture business in Turkey with the Koc Group and a 21% interest in, and strategic alliance with, German home improvement retailer Hornbach. By Simon Zekaria, Dow Jones Newswires; +44 207 842-9410; [email protected] (END) Dow Jones Newswires July 22, 2010 02:49 ET (06:49 GMT)