B&Q owner Kingfisher blames wet spring for sales slide

Europe’s biggest home improvements retailer posts a steep fall in first quarter profits

Kingfisher, Europe’s biggest home improvements retailer, posted a steep fall in first quarter profits, hurt by a weakening euro and April’s torrential rain which put British and French shoppers off buying seasonal ranges.

The firm, which runs the market-leading B&Q chain in Britain as well as Castorama and Brico Depot in France and elsewhere, also faced tough comparisons with a period of buoyant trading last year when sales were boosted by fine spring weather.

Kingfisher, with about 950 stores in eight countries in Europe and Asia, said on Thursday its retail profit fell 8.6% to £160m in the three months to 30 April.

That puts it at the bottom end of analyst forecasts which ranged between £160-165m, according to a company poll.

The outcome also reflected the currency impact of a weaker euro and Polish zloty on conversion into sterling.

Even excluding the impact of foreign exchange fluctuations, sales at stores open over a year fell 4.8% year-on-year. The biggest drag was in the UK and Ireland where sales dropped 10.4% on a like-for-like basis.

The drop in the UK and Ireland compares to a fourth quarter decline of 2.5% and analysts’ consensus expectations of a fall of 10%.

First quarter like-for-like sales at Castorama France fell 0.8% and were up 2.4% at Brico Depot France stores, versus rises of 2.9% and 5.7% respectively in the previous quarter.

Many European retailers are suffering as disposable incomes are squeezed by rising prices, muted wages growth and government austerity measures, and as shoppers fret over the implications of the eurozone crisis.

Kingfisher, the world’s third largest home improvements retailer behind US groups Lowe’s and Home Depot, has generally performed better than most, offsetting weak demand in many of its markets with a drive to improve profitability by buying more goods centrally, and directly, from cheaper manufacturing centres like China.

In March the firm posted a 20% rise in 2011/12 profit.

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