Kingfisher share price down on FTSE 100 as retailer predicts "tough" year after good Q1 figures
Shares in Kingfisher were down on the FTSE 100 in morning trading after the group predicted a "tough" year, despite reporting a rise in retail profit and sales in the first quarter ended 30 April.
Total group sales increased 3.3 per cent to £2.7 billion, while retail profit jumped 19.1 per cent to £174 million.
The group's Castorama business in France saw sales rise 4.1 per cent to £1.1 billion, while in Britain and Ireland sales at B&Q stores increased 1.8 per cent to £1.2 billion.
In its other international businesses sales rose 5.5 per cent to £434 million.
In addition to the rise in profits, Kingfisher said it had increased its net cash in the period from £86 million to £283 million.
Ian Cheshire, Chief Executive of Kingfisher, said, "I am pleased that we have made a strong start to the year, capitalising on more favourable weather conditions right across Europe and extended public holidays in the UK. We delivered sales growth in all three of our divisions, with continued margin initiatives and improved cost productivity delivering retail profits up over 20%. In France, where our initiatives aimed at making home improvement easier for our customers are most advanced, our performance was particularly strong with sales growing ahead of the market.
"Whilst we have got off to a good start, it remains our view that this year is likely to be a tough one for all retailers, especially in the UK. It is also likely that the early spring weather will have brought forward some of our outdoor seasonal sales. So we remain very focused on our well established programme of self-help to deliver a solid full year result, especially with the key summer trading period in France still ahead of us. We are also busy mobilising the business for the next phase of our longer term growth."
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented, "General market malaise and some inevitable profit taking have hit Kingfisher shares, despite the company reporting a strong start to the year.
"Warmer weather and the Easter break were certainly contributory factors, whilst the French business received a boost from some additional focus by Kingfisher. Elsewhere, the improvement in the net cash position provides a healthy glow, whilst the group's geographical diversity continues to underpin performance. On the downside, there were inevitably cautious comments from the management on the outlook, whilst comparatives look certain to become more challenging as the year wears on.
"The shares have had a heady run, having risen 26% over the last year, as compared to a gain of 14% for the wider FTSE100, and 16% in the last three months alone (FTSE down 1%). Today's profit taking is likely to tempt investors further, since the consensus remains that the shares are a strong buy."
By 08:35 shares in Kingfisher were down 4.04 per cent on the FTSE 100 to 270.70 pence per share.
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