As Kingfisher provides a trading update Ian Forrest, investment research analyst at The Share Centre, explains what it means for investors…
This morning, B&Q and Screwfix owner Kingfisher reported a healthy improvement in trading in its second quarter. Like-for-like sales were up 3.5%, compared to 0.8% in the first quarter. In the UK, B&Q also continued to perform well with its like-for-like sales up 3.4%, whilst Screwfix saw its sales rise 16.7%. The group said it is on track to have opened a further 11 Screwfix outlets in the second quarter.
The biggest improvement was in France where seasonal sales of Kingfisher’s DIY retail group Castorama rose 8.3%. Trading at Brico Depot remains subdued with sales rising just 0.7% due to a soft housebuilding market. Sales in other international markets also showed some good improvement, with Poland registering like-for-like growth of 16.5%. Kingfisher has also made a start on the new chief executive’s plan to unify the various businesses by starting a pilot of a new IT system in Ireland.
These good figures from Kingfisher were welcomed by the market although investors should note that the comparable figures from last year are a little kinder than those for the first quarter. We are maintaining our ‘hold’ recommendation on the shares, due to the good level of cash flow and the potential of the new strategy. We do however prefer Booker in the sector due to the proven track record of its management and the growth potential of its recent acquisitions.
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