Kingfisher profits drop and Trade Depot to close

Like-for-like sales across the group dropped 5.1 per cent with a particularly poor performance in the UK, while group retail sales remained flat, at£2.6 billion.

The retailer said it is closing all its nine Trade Depot stores, resulting in exceptional closure costs of around£20 million. The stores recorded a retail loss of£5 million in 2007/2008.

Like-for-like sales in the UK decreased 9.2 per cent, with overall sales declining 6.1 per cent to£1 billion.

B&Q’s like for likes fell 8.7 per cent, impacted by a “weakening economic backdrop” and poor weather. Sales of big-ticket items plummeted 14 per cent.

France, where the company operates Castorama and Brico Depot, performed better, with like for likes slipping 1.2 per cent and total sales climbing 3.7 per cent.

Its Other International business, including China, Poland, Russia, Germany and Turkey, saw total sales jump 7.3 per cent to£507 million, while like for likes dropped 3.9 per cent, reflecting the comparable store sales decline in China.

Retail profit in Other International was down 1.6 per cent to£35 million.

China’s like for likes plummeted 32.2 per cent, with total sales down 28.7 per cent, due to a deteriorating housing market. Kingfisher said it is finalising a more comprehensive repositioning plan than previously envisaged.

Group chief executive Ian Cheshire said: “Consumer confidence has clearly been shaken over the last few months by international economic events and this has impacted demand in all our markets. However, we enter this period of slowdown in a strong position with a robust balance sheet, international market leadership, retail brands with a strong value positioning and significant buying scale.

“Since the beginning of the year, we have taken a vigorous approach to managing our margins and costs, which are helping to support profit and cash flow.

“There are clearly more challenging times ahead and we are concentrating on trading effectively in difficult markets by managing our working capital, cash and costs tightly.”

On MFI’s collapse last night, Cheshire said: “No news like this is welcome. It will result in turbulence in the market.” But he added “If you lose the second biggest player in kitchens then it will clearly create opportunities for us.”

He also said Kingfisher would be implementing the VAT changes in full on Monday.

“Anything that puts money in the hands of customers is a good thing, but it’s a mixed blessing,” said Cheshire. “The mechanics of it will be challenging but it’s a step in the right direction.”