B&Q reported a slide in sales, although Kingfisher's overseas operations saw a healthy rise
THE fallout from the housing slump affected another victim yesterday as the owner of B&Q, Britain's biggest DIY chain, said UK like-for-like sales slumped just under 8 per cent in a "very tough" first trading quarter.
Kingfisher said this led to a
n 8.5 per cent fall in UK profits to £33m against £35m in the same quarter of 2007.
A stronger overseas performance saw group profits rise 8.9 per cent to £96m.
Ian Cheshire, recently appointed chief executive of Kingfisher following the ousting of Gerry Murphy, said the poor weather compared with last year's warm spring had also seen a 40 per cent fall in sales of outdoor products.
Cheshire said this financial year's budgets had been reworked with lower sales growth targets in what he forecast "could be a challenging year".
But he said that improved targets for profit margins had been put in place.
Profit margins at B&Q – which trades from 323 stores – were up nearly 3 per cent during Q1 partly thanks to lower levels of markdowns.
Cheshire is leading a store revamp at B&Q, including updated product ranges, better layouts and improved customer service.
Six store refurbishments were completed during Q1, with about 40 others planned for the year.
Kingfisher's Screwfix business, which trades from 117 outlets, fared better, with sales up 23.6 per cent to £127m.
The group's overseas operations, which now comprise more than half of total sales, performed better than the UK.
In France, where Kingfisher runs the Castorama and Brico Depot chains, total sales rose 17 per cent to £897m, with retail profits up 9.4 per cent at £44m.
Sales across the group's other overseas markets, which include China, Poland and Spain, were up 8.6 per cent to £462m, with a particularly strong performance in eastern Europe. Profits in this division were 52.8 per cent ahead at £20m.
Home improvement chains across Europe are struggling as shoppers cut back on spending amid rising fuel and food costs. Britain's Home Retail, which runs the Homebase chain, and Germany's Praktiker, have both posted recent weak sales.
Nick Bubb, retailing specialist at broker Pali International, said the results were better than expected, with the UK business holding up "surprisingly well".
"The outlook statement is not too bad, with some self-help," Bubb said. "Shares should be up on this, but the UK downturn will get them in the end."
Bubb said he was sticking with a full-year pre-tax profits forecast of £370m against £395m last time.
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