Kingfisher set to post fall in sales amid slowdown in property market
- Credit: Archant
B&Q is expected to report a slump in sales this week as a slowing housing market drags on its UK performance.
The DIY chain is tipped by analysts at Jefferies to register a 4% slide in like-for-like sales in the second quarter when its parent firm, Kingfisher, posts figures on Thursday.
Jefferies pointed to a “softer housing market” contributing to its forecast, which follows a number of surveys showing that Britain’s residential property market has cooled considerably since the Brexit vote last year.
George Salmon, equity analyst at Hargreaves Lansdown, also highlighted softening seasonal sales, which had helped its performance in the first quarter.
He added: “The worry heading into the second quarter update is the seasonal boost doesn’t appear again, and a slower housing market drags UK sales down.”
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Kingfisher has also been battling a stalling housing recovery in France, where the group trades as Castorama and Brico Depot.
However, one bright spot is again expected to be Screwfix, where like-for-like sales are set to increase 10%.
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The trade-focused chain has been the stand-out performer for Kingfisher of late, regularly clocking up double-digit sales increases.
Screwfix operates out of more than 500 outlets and Kingfisher has upped its long-term target to have 700 stores in the UK, from 600 previously.
Its solid performance is tipped to help lift the group’s total sales 2.9% to £3.1 billion in the period.
In March, chief executive Veronique Laury, who has been overseeing a turnaround at the firm, said Kingfisher had finished its B&Q store closure programme, which has seen it shut 65 shops and slash around 3,000 jobs in the UK and Ireland over the last two years.
As part of Ms Laury’s revival, she is aiming to boost profits by £500 million a year by 2021.
The firm has has also flagged that the EU referendum has “created uncertainty for the UK economic outlook”, something that has been reflected in Kingfisher’s share price, which has fallen from 363p in August 2016 to around 306p today.
Ian Forrest, investment research analyst at The Share Centre, said: “It has been a fairly dismal year for shares in the owner of B&Q and Screwfix.
“Followers of the group will be looking to see if Screwfix in the UK is still performing well.
“Any update on the long-term plan to unify the group’s back office systems, cut back the number of product lines and reduce costs will also be of interest to the market.”