Kingfisher and Topps Tiles updates won’t lift home sector gloom

B&Q owner Kingfisher, which revealed a group like-for-like decline of 1.5% in the year to January 30, is expected to report a fall in like-for-likes in its first quarter when it updates the market on Thursday, according to Shore Capital analyst Kate Calvert.

She expects a similar update to that of Wickes last week, which revealed a 1.7% decline in like-for-likes in the 17 weeks to May 1. However, the like-for-like decline had eased in the most recent weeks.

Calvert said: “Spend is very subdued on big ticket as the emergency Budget is coming up - why do a big project in May or June when you can put it off till July or August when the weather is still nice?”

A worse than expected update from Topps Tiles last month led to widespread downgrades to profit forecasts. The retailer said it expects like-for-likes to increase 2.1% in the 27 weeks to April 3 when it posts interims next week, after they rose 5.5% in the first quarter, implying that like-for-likes in the most recent quarter were flat.

Calvert said Topps Tiles was “harder to call” and that “sales remain pretty subdued there too”, but added: “Topps is in a pretty good position given its cash flow.”

She said that the first-quarter updates for both retailers will be “very difficult because of very strong comparatives” due to the timing of Easter and better weather last year.

But she acknowledged: “Now the weather has improved sales are starting to come through.”

Calvert noted that clothing is doing “very well” compared with sectors such as home improvement.

“There is very much a differentiating of fortunes between sectors at the moment,” said Calvert. “Consumer demand for big ticket is where people are a bit more cautious. It’s the macro stuff that’s driving it. It will be a tough 12 months.”

April’s British Retail Consortium retail sales figures showed homewares fell back below earlier levels this year “despite some further discounts and promotions”, and found that “anything home related was hit hard by the distorting effects of Easter”.

BRC director-general Stephen Robertson said retailers are “having to work harder to maintain” sales growth, by running more promotions and discounts, “especially on big-ticket items”.

ONS sales data found that by value, household goods sales rose 2.5% in April.