Kingfisher, Europe's biggest home improvements retailer, expects annual profits towards the top end of analysts' forecasts after steps to lift profit margins boosted sluggish fourth-quarter sales growth.
The group, which runs B&Q as well as the Castorama and Brico Depot chains in France and elsewhere, said today sales at stores open over a year rose 0.6 per cent in the 13 weeks to January 29th, with growth in France and Poland offset by weaker performances in Britain and China.
Analysts expect the group to make a full-year adjusted pretax profit of £661 million to £672 million, it said, up from £547 million the year before.
Kingfisher, with over 840 stores in eight countries, has been cutting costs to cope with tough trading conditions, as well as improving margins by buying more goods centrally and from cheaper manufacturing centres like Asia.
Underlying sales at B&Q fell 0.3 per cent in the fourth quarter as severe winter weather disrupted the delivery and installation of kitchens. However, gross margins edged up.
Retailers in Britain are having a particularly tough time as the government moves aggressively to cut its deficit with higher taxes and public spending cuts.
Underlying sales in France were up 2 per cent, with a 4.7 per cent increase at Castorama tempered by a 1 per cent decline at the more building trade-focused Brico Depot. Margins were also up slightly across the French business.
Underlying sales in Poland were up 3.3 per cent, returning to growth after several quarters of declines, but were down 16.2 per cent in China after a big rise the same time last year.
Kingfisher said the Chinese business, which it has been shrinking in a bid to return to sustainable growth, made a profit in the quarter and its turnaround was on track.
Kingfisher is due to announce the next stage of its strategy alongside full-year results on March 24th, when analysts expect an update on expansion plans and on further steps to boost profitability, such as selling more own-brand goods.
Its shares have beaten the STOXX Europe 600 retail index by 18 per cent over the past year. They closed at 257.3 pence yesterday, valuing the firm at about £6 billion.
Reuters
